10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-36041

INDEPENDENCE REALTY TRUST, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	26-4567130
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1835 Market Street, Suite 2601 Philadelphia, PA	19103
(Address of Principal Executive Offices)	(Zip Code)

(267) 270-4800

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	IRT	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☒	Accelerated filer	☐
Non-Accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

As of October 25, 2021 there were 105,111,943 shares of the Registrant’s common stock issued and outstanding.

INDEPENDENCE REALTY TRUST, INC.

INDEX

			Page
PART I—FINANCIAL INFORMATION		3
Item 1.	Financial Statements (unaudited)		3
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020		3
	Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2021 and September 30, 2020		4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months ended September 30, 2021 and September 30, 2020		5
	Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months ended September 30, 2021 and September 30, 2020		6
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2021 and September 30, 2020		8
	Notes to Condensed Consolidated Financial Statements as of September 30, 2021		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		32
Item 4.	Controls and Procedures		32
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		32
Item 1A.	Risk Factors		32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3.	Defaults Upon Senior Securities		42
Item 4.	Mine Safety Disclosures		43
Item 5.	Other Information		43
Item 6.	Exhibits		43
Signatures		44

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited and dollars in thousands, except share and per share data)

	As of September 30, 2021			As of December 31, 2020
ASSETS:
Investments in real estate:
Investments in real estate, at cost	$	1,904,760		$	1,916,770
Accumulated depreciation		(223,244	)		(208,618	)
Investments in real estate, net		1,681,516			1,708,152
Real estate held for sale		120,409			—
Cash and cash equivalents		8,720			8,751
Restricted cash		6,138			4,864
Investments in unconsolidated real estate entities		13,561			—
Other assets		15,053			12,338
Derivative assets		1,168			—
Intangible assets, net of accumulated amortization of $411 and $0, respectively		346			792
Total Assets	$	1,846,911		$	1,734,897
LIABILITIES AND EQUITY:
Indebtedness, net of unamortized deferred financing costs of $4,237 and $4,208, respectively	$	996,270		$	945,686
Indebtedness associated with real estate held for sale, net of unamortized deferred financing costs of $45 and $0, respectively		22,459			—
Accounts payable and accrued expenses		39,593			25,416
Accrued interest payable		1,708			1,976
Dividends payable		12,648			12,257
Derivative liabilities		17,492			29,842
Other liabilities		6,756			6,949
Total Liabilities		1,096,926			1,022,126
Equity:
Stockholders’ equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively		—			—
Common stock, $0.01 par value; 500,000,000 shares authorized, 105,106,714 and 101,803,762 shares issued and outstanding, including 253,698 and 339,468 unvested restricted common share awards, respectively		1,051			1,018
Additional paid-in capital		965,018			919,615
Accumulated other comprehensive income (loss)		(19,507	)		(33,822	)
Retained earnings (accumulated deficit)		(200,429	)		(178,751	)
Total stockholders’ equity		746,133			708,060
Noncontrolling interests		3,852			4,711
Total Equity		749,985			712,771
Total Liabilities and Equity	$	1,846,911		$	1,734,897

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited and dollars in thousands, except share and per share data)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
REVENUE:
Rental and other property revenue	$	60,592		$	54,001		$	172,689		$	157,244
Other revenue		188			199			647			574
Total revenue		60,780			54,200			173,336			157,818
EXPENSES:
Property operating expenses		23,164			22,129			66,300			62,840
Property management expenses		2,199			2,078			6,318			6,311
General and administrative expenses		3,985			2,912			14,168			11,862
Depreciation and amortization expense		17,384			15,232			50,699			45,291
Abandoned deal costs		—			—			—			130
Casualty losses		—			—			359			411
Total expenses		46,732			42,351			137,844			126,845
Interest expense		(8,700	)		(8,917	)		(25,644	)		(27,616	)
Gain on sale (loss on impairment) of real estate assets, net		11,492			(1,840	)		11,492			(1,840	)
Merger and integration costs		(5,276	)		—			(5,276	)		—
Net income:		11,564			1,092			16,064			1,517
Income allocated to noncontrolling interest		(62	)		(2	)		(90	)		(10	)
Net income allocable to common shares	$	11,502		$	1,090		$	15,974		$	1,507
Earnings per share:
Basic	$	0.11		$	0.01		$	0.16		$	0.02
Diluted	$	0.11		$	0.01		0.15			$	0.02
Weighted-average shares:
Basic		104,918,674			94,456,987			102,882,723			93,261,757
Diluted		107,668,675			95,222,623			104,062,661			94,099,091

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and dollars in thousands)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income	$	11,564		$	1,092		$	16,064		$	1,517
Other comprehensive income (loss):
Change in fair value of interest rate hedges		4,759			3,225			20,296			(22,170	)
Realized (losses) gains on interest rate hedges reclassified to earnings		(2,238	)		(1,752	)		(5,859	)		(3,575	)
Total other comprehensive income (loss)		2,521			1,473			14,437			(25,745	)
Comprehensive income (loss) before allocation to noncontrolling interests		14,085			2,565			30,501			(24,228	)
Allocation to noncontrolling interests		(79	)		(64	)		(212	)		146
Comprehensive income (loss)	$	14,006		$	2,501		$	30,289		$	(24,082	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

(Unaudited and dollars in thousands, except share information)

	Common Shares			Par Value Common Shares			Additional Paid In Capital			Accumulated Other Comprehensive Income (loss)			Retained Earnings (Deficit)			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2020		101,803,762		$	1,018		$	919,615		$	(33,822	)	$	(178,751	)	$	708,060		$	4,711		$	712,771
Net income		—			—			—			—			1,086			1,086			7			1,093
Other comprehensive income		—			—			—			13,325			—			13,325			88			13,413
Stock compensation		286,647			2			3,346			—			—			3,348			—			3,348
Issuance of common shares, net		—			—			(59	)		—			—			(59	)		—			(59	)
Repurchase of shares related to equity award tax withholding		(56,677	)		(2	)		(2,860	)		—			—			(2,862	)		—			(2,862	)
Common dividends declared ($0.12 per share)		—			—			—			—			(12,486	)		(12,486	)		—			(12,486	)
Distribution to noncontrolling interest declared ($0.12 per unit)		—			—			—			—			—			—			(80	)		(80	)
Balance, March 31, 2021		102,033,732		$	1,018		$	920,042		$	(20,497	)	$	(190,151	)	$	710,412		$	4,726		$	715,138
Net income														3,386			3,386			21			3,407
Other comprehensive income (loss)		—			—			—			(1,514	)		—			(1,514	)		17			(1,497	)
Stock compensation expense		23,436			1			1,356			—			—			1,357			—			1,357
Repurchase of shares related to equity award tax withholding		(1,674	)		1			(81	)		—			—			(80	)		—			(80	)
Issuance of common shares, net		2,932,000			30			41,580			—			—			41,610			—			41,610
Conversion of noncontrolling interest to common shares		122,155			1			857			—			—			858			(858	)		—
Common dividends declared ($0.12 per share)		—			—			—			—			(12,585	)		(12,585	)		—			(12,585	)
Distribution to noncontrolling interest declared ($0.12 per unit)		—			—			—			—			—			—			(67	)		(67	)
Balance, June 30, 2021		105,109,649		$	1,051		$	963,754		$	(22,011	)	$	(199,350	)	$	743,444		$	3,839		$	747,283
Net income														11,502			11,502			62			11,564
Other comprehensive income		—			—						2,504			—			2,504			17			2,521
Stock compensation expense		(2,209	)		—			1,298			—			—			1,298			—			1,298
Repurchase of shares related to equity award tax withholding		(726	)		—			36			—			—			36			—			36
Issuance of common shares, net		—			—			(70	)		—			—			(70	)		—			(70	)
Common dividends declared ($0.12 per share)		—			—			—			—			(12,581	)		(12,581	)		—			(12,581	)
Distribution to noncontrolling interest declared ($0.12 per unit)		—			—			—			—			—			—			(66	)		(66	)
Balance, September 30, 2021		105,106,714		$	1,051		$	965,018		$	(19,507	)	$	(200,429	)	$	746,133		$	3,852		$	749,985

6

	Common Shares			Par Value Common Shares			Additional Paid In Capital			Accumulated Other Comprehensive Income (loss)			Retained Earnings (Deficit)			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance, December 31, 2019		91,070,637		$	911		$	765,992		$	(12,099	)	$	(141,525	)	$	613,279		$	6,478		$	619,757
Net income (loss)		—			—			—			—			(372	)		(372	)		(2	)		(374	)
Other comprehensive income (loss)		—			—			—			(23,651	)		—			(23,651	)		(189	)		(23,840	)
Stock compensation		183,940			2			2,642			—			—			2,644			—			2,644
Issuance of common shares, net		3,406,000			35			49,729			—			—			49,764			—			49,764
Repurchase of shares related to equity award tax withholding		(51,128	)		(1	)		(1,489	)		—			—			(1,490	)		—			(1,490	)
Conversion of noncontrolling interest to common shares		82,357			—			627			—			—			627			(627	)		—
Common dividends declared ($0.18 per share)		—			—			—			—			(17,148	)		(17,148	)		—			(17,148	)
Distribution to noncontrolling interest declared ($0.18 per unit)		—			—			—			—			—			—			(142	)		(142	)
Balance, March 31, 2020		94,691,806		$	947		$	817,501		$	(35,750	)	$	(159,045	)	$	623,653		$	5,518		$	629,171
Net income		—			—			—			-			789			789			10			799
Other comprehensive (loss)		—			—			—			(3,349	)		—			(3,349	)		(29	)		(3,378	)
Stock compensation expense		49,340			—			1,250			—			—			1,250			—			1,250
Issuance of common shares, net		—			—			(32	)		—			—			(32	)		—			(32	)
Common dividends declared ($0.12 per share)		—			—			—			—			(11,329	)		(11,329	)		—			(11,329	)
Distribution to noncontrolling interest declared ($0.12 per unit)		—			—			—			—			—			—			(95	)		(95	)
Balance, June 30, 2020		94,741,146		$	947		$	818,719		$	(39,099	)	$	(169,585	)	$	610,982		$	5,404		$	616,386
Net income		—			—			—			—			1,090			1,090			2			1,092
Other comprehensive income		—			—			—			1,411			—			1,411			62			1,473
Stock compensation expense		(4,488	)		—			920			—			—			920			—			920
Issuance of common shares, net		—			—			(102	)		—			—			(102	)		—			(102	)
Conversion of noncontrolling interest to common shares		87,148			1			568			—			—			569			(569	)		—
Common dividends declared ($0.12 per share)		—			—			—			—			(11,339	)		(11,339	)		—			(11,339	)
Distribution to noncontrolling interest declared ($0.12 per unit)		—			—			—			—			—			—			(84	)		(84	)
Balance, September 30, 2020		94,823,806		$	948		$	820,105		$	(37,688	)	$	(179,834	)	$	603,531		$	4,815		$	608,346

The accompanying notes are an integral part of these condensed consolidated financial statements

7

Independence Realty Trust, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited and dollars in thousands)

	For the Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net income	$	16,064		$	1,517
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation and amortization		50,699			45,291
Amortization of deferred financing costs		1,154			1,085
Stock compensation		5,914			4,761
(Gain on sale) loss on impairment of real estate assets, net		(11,492	)		1,840
Casualty losses		359			411
Amortization related to derivative instruments		920			890
Changes in assets and liabilities:
Other assets		(2,518	)		(3,226	)
Accounts payable and accrued expenses		12,834			8,289
Accrued interest payable		(268	)		(270	)
Other liabilities		59			(22	)
Cash flow provided by operating activities		73,725			60,566
Cash flows from investing activities:
Acquisition of real estate properties		(139,231	)		(51,447	)
Investments in unconsolidated real estate entities		(13,561	)		—
Disposition of real estate properties		39,182			—
Capital expenditures		(31,827	)		(26,986	)
Cash flow used in investing activities		(145,437	)		(78,433	)
Cash flows from financing activities:
Proceeds from unsecured credit facility and term loans		387,500			99,501
Unsecured credit facility repayments		(234,800	)		(44,000	)
Mortgage principal repayments		(79,582	)		(37,871	)
Payments for deferred financing costs		(1,261	)		(50	)
Proceeds from issuance of common stock, net		41,481			49,630
Distributions on common stock		(37,249	)		(44,808	)
Distributions to noncontrolling interests		(228	)		(369	)
Repurchase of shares related to equity award tax withholding		(2,906	)		(1,490	)
Cash flow provided by financing activities		72,955			20,543
Net change in cash and cash equivalents, and restricted cash		1,243			2,676
Cash and cash equivalents, and restricted cash, beginning of period		13,615			14,433
Cash and cash equivalents, and restricted cash, end of the period	$	14,858		$	17,109
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheet
Cash and cash equivalents	$	8,720		$	9,891
Restricted cash		6,138			7,218
Total cash, cash equivalents, and restricted cash, end of period	$	14,858		$	17,109

The accompanying notes are an integral part of these condensed consolidated financial statements

.

8

Independence Realty Trust, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

As of September 30, 2021

(Unaudited and dollars in thousands, except share and per share data)

NOTE 1: Organization

Independence Realty Trust, Inc. (“IRT”), is a self-administered and self-managed Maryland real estate investment trust (“REIT”) which was formed on March 26, 2009.  Our primary purposes are to acquire, own, operate, improve and manage multifamily apartment communities in non-gateway markets. As of September 30, 2021, we owned and operated 57 multifamily apartment properties that contain 16,109 units across non-gateway U.S. markets including Atlanta, Dallas, Louisville, Memphis, Raleigh, and Tampa. We own all of our assets and conduct substantially all of our operations through Independence Realty Operating Partnership, LP (“IROP”), of which we are the sole general partner.   

   As used herein, the terms “we,” “our” and “us” refer to Independence Realty Trust, Inc. and, as required by context, IROP and their subsidiaries.

Pending Merger

On July 26, 2021, we, together with IROP, and IRSTAR Sub, LLC, a wholly-owned subsidiary of IRT (“IRT Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”) with Steadfast Apartment REIT, Inc. (“STAR”) and its operating partnership, Steadfast Apartment REIT Operating Partnership, L.P. (“STAR OP”).

On the terms, and subject to the conditions of, the Merger Agreement, STAR will merge with and into IRT Merger Sub (the “REIT Merger”), with IRT Merger Sub surviving the REIT Merger as a wholly-owned subsidiary of IRT; and immediately thereafter, STAR OP will merge with and into IROP (the “Partnership Merger” and, together with the REIT Merger, the “Mergers”), with IROP surviving the Partnership Merger.

In the REIT Merger, each outstanding share of STAR common stock, par value $0.01 per share (“STAR common stock”) will be converted automatically into the right to receive 0.905 (the “Exchange Ratio”) of a newly issued share of IRT common stock, par value $0.01 per share (“IRT common stock”). In the Partnership Merger, each outstanding unit of limited partnership of STAR OP (each, a “STAR OP common unit”) will be converted into the right to receive the Exchange Ratio of a newly issued common unit of limited partnership of IROP (each, an “IROP common unit”). Consummation of the Mergers is subject to customary closing conditions, including, among others, receipt of IRT stockholder approval and STAR stockholder approval and we currently expect the Mergers to close in December 2021.

In conjunction with the Mergers, we have incurred approximately $5,276 in merger-related transaction costs during the three and nine months ended September 30, 2021. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees. These costs are presented in a separate line item on the face of the condensed consolidated statements of operations.  

NOTE 2: Summary of Significant Accounting Policies

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2020 included in our 2020 Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of IROP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.  Pursuant to the Financial Accounting Standards Board (the “FASB”)

9

Accounting Standards Codification Topic 810, “Consolidation”, IROP is considered a variable interest entity to which we are the primary beneficiary.  As our significant asset is our investment in IROP, substantially all of our assets and liabilities represent the assets and liabilities of IROP.

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with maturities of three months or less when purchased.  Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution.  We mitigate credit risk by placing cash and cash equivalents with major financial institutions.  To date, we have not experienced any losses on cash and cash equivalents.

e. Restricted Cash

Restricted cash includes escrows of our funds held by lenders to fund certain expenditures, such as real estate taxes and insurance, or to be released at our discretion upon the occurrence of certain pre-specified events.  As of September 30, 2021 and December 31, 2020, we had $6,138 and $4,864, respectively, of restricted cash.

f. Investments in Real Estate

Investments in real estate are recorded at cost less accumulated depreciation. Costs that both add value and appreciably extend the useful life of an asset are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

Investments in real estate are classified as held for sale in the period in which certain criteria are met including when management commits to a plan to sell, an active program to locate a buyer has been initiated, the sale is probable, and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan of sale will be made or the plan of sale will be withdrawn.

Allocation of Purchase Price of Acquired Assets

The properties we acquire are generally accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs related to the acquisition, are accumulated and then allocated to the individual assets and liabilities acquired based upon their relative fair value.  Transaction costs and fees incurred related to the financing of an acquisition are capitalized and amortized over the life of the related financing.

We estimate the fair value of acquired tangible assets (consisting of land, building and improvements), identified intangible assets (consisting of in-place leases), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date.

The aggregate value of in-place leases is determined by evaluating various factors, including the terms of the leases that are in place and assumed lease-up periods. The value assigned to in-place lease assets is amortized over the assumed lease up period, typically six months. During the three and nine months ended September 30, 2021, we acquired in-place leases with a value of $0 and $757, respectively, as part of related property acquisitions that are discussed further in Note 3. For the three and nine months ended September 30, 2021, we recorded $368 and $1,203, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2020, we recorded $73 and $631, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2021, we wrote-off fully amortized intangible assets of $0 and $792, respectively. For the three and nine months ended September 30, 2020, we wrote-off fully amortized intangible assets of $211 and $1,171, respectively. As of September 30, 2021, we expect to record additional amortization expense on current in-place intangible assets of $346 for the remainder of 2021.  

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Impairment of Long-Lived Assets

Management evaluates the recoverability of our investment in real estate assets, including related identifiable intangible assets, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment”. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that recoverability of the assets is not assured.

Management reviews our long-lived assets on an ongoing basis and evaluates the recoverability of the carrying value when there is an indicator of impairment. An impairment charge is recorded when it is determined that the carrying value of the asset exceeds the fair value. The estimated cash flows used for the impairment analysis and the determination of estimated fair value are based on our plans for the respective assets and our views of market and economic conditions. The estimates consider matters such as current and historical rental rates, occupancies for the respective and/or comparable properties, and recent sales data for comparable properties. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of impairment losses, which, under the applicable accounting guidance, could be substantial.

Depreciation Expense

Depreciation expense for real estate assets is computed using a straight-line method based on a life of 40 years for buildings and improvements and five to ten years for equipment and fixtures.  For the three and nine months ended September 30, 2021, we recorded $17,016 and $49,496 of depreciation expense, respectively. For the three and nine months ended September 30, 2020, we recorded $15,159 and $44,660 of depreciation expense, respectively.

Casualty Loss

Occasionally, we incur losses at our communities from wind storms, floods, fires and similar hazards. Sometimes, a portion of these losses are not fully covered by our insurance policies due to deductibles. In these cases, we estimate the carrying value of the damaged property and record a casualty loss for the difference between the estimated carrying value and the insurance proceeds. During the three and nine months ended September 30, 2021, we incurred $0 and $359 of casualty losses, respectively. We incurred $0 and $411casualty losses during the three and nine months ended September 30, 2020.

g. Investments in unconsolidated real estate entities

We invest in joint ventures in which we exercise significant influence but do not control the major decisions of the joint venture. Therefore, we account for these investments using the equity method of accounting.  Under the equity method of accounting, the investments are carried at cost plus our share of net earnings or losses.  As of September 30, 2021 and December 31, 2020, the carrying value of our investments in joint ventures totaled $13,561 and $0, respectively, and was recorded as a separate line item on the face of our consolidated balance sheet. We recognized no income or losses from equity method investments during the three and nine months ended September 30, 2021 and 2020.

h. Revenue and Expenses

Rental and other property revenue

We apply FASB ASC Topic 842, “Leases” with respect to our accounting for rental income.  We primarily lease apartment units under operating leases generally with terms of one year or less. Rental payments are generally due monthly and rental revenues are recognized on an accrual basis when earned.  We have elected to account for lease (i.e. fixed payments including base rent) and non-lease components (i.e. tenant reimbursements and certain other service fees) as a single combined operating lease component since (1) the timing and pattern of transfer of the lease and non-lease components is the same, (2) the lease component is the predominant element, and (3) the combined single lease component would be classified as an operating lease.

We make ongoing estimates of the collectability of our base rents, tenant reimbursements, and other service fees included within rental and other property revenue.  If collectability is not probable, we adjust rental and other property income for the amount of uncollectible revenue.

Due to the COVID-19 pandemic, some of our residents have experienced difficulty making rent payments and, as a result, our rent receivables have increased compared to historical levels. This caused us to further evaluate collectability and we recorded $121 and $246 provision for bad debts during the three and nine months ended September 30, 2021, respectively, to appropriately reflect management’s estimate for uncollectible accounts. The provision for bad debts was recorded as a reduction to rental and other property income in our consolidated statements of operations. The total adjustment to rental and other property income for the three and nine months ended September 30, 2021 was $655 and $1,678, respectively. The total adjustment to rental and other property income for the three and nine months ended September 30, 2020 was $340 and $1,428, respectively.

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To support our residents that were economically impacted and unable to pay their rent in full during 2020, we offered residents deferred rent payment plans whereby the resident could defer between 25% and 75% of their monthly rent for between one and three months. Residents were required to provide evidence of financial hardship and commit to a full 12-month lease term, which provided a longer period over which the deferred rent could be repaid. We accounted for the deferred payment plans as if no change had been made to the original lease agreement and continued to recognize rental income while increasing lease receivables from residents. As of September 30, 2021 and December 31, 2020, deferred rents receivable from residents totaled $0 and $175, respectively.  

For the three and nine months ended September 30, 2021, we recognized revenues of $28 and $69, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers. For the three and nine months ended September 30, 2020, we recognized revenues of $32 and $184, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers.

Advertising Expenses

For the three and nine months ended September 30, 2021, we incurred $624 and $1,804 of advertising expenses, respectively. For the three and nine months ended September 30, 2020, we incurred $667 and $1,827 of advertising expenses, respectively.

i. Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure, as well as to hedge specific anticipated transactions. While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described.  The counterparties to these contractual arrangements are major financial institutions with which we and our affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.

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In accordance with FASB ASC Topic 815, “Derivatives and Hedging”, we measure each derivative instrument at fair value and record such amounts in our consolidated balance sheets as either an asset or liability.  For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative are reported in other comprehensive income and changes in the fair value of the ineffective portions of cash flow hedges, if any, are recognized in earnings.  For derivatives not designated as hedges (or designated as fair value hedges), the changes in fair value of the derivative instrument are recognized in earnings.  Any derivatives that we designate in hedge relationships are done so at inception.  At inception, we determine whether or not the derivative is highly effective in offsetting changes in the designated interest rate risk associated with the identified indebtedness using regression analysis.  At each reporting period, we update our regression analysis and use the hypothetical derivative method to measure any ineffectiveness.

j. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

• Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

• Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. Given that cash and cash equivalents and restricted cash are short term in nature with limited fair value volatility, the carrying amount is deemed to be a reasonable approximation of fair value and the fair value input is classified as a Level 1 fair value measurement. The fair value input for the derivatives is classified as a Level 2 fair value measurement within the fair value hierarchy. The fair value inputs for our unsecured credit facility and term loans are classified as Level 2 fair value measurements within the fair value hierarchy. The fair value of mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy.  We determine appropriate credit spreads based on the type of debt and its maturity. There were no transfers between levels in the fair value hierarchy for the nine months ended September 30, 2021. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:

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	As of September 30, 2021				As of December 31, 2020
Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Cash and cash equivalents	$	8,720	$	8,720	$	8,751	$	8,751
Restricted cash		6,138		6,138		4,864		4,864
Derivative assets		1,168		1,168		—		—
Liabilities
Debt:
Unsecured credit facility		136,324		137,503		183,110		184,802
Unsecured term loans		497,844		500,000		298,759		300,000
Mortgages (1)		384,561		396,504		463,817		479,929
Derivative liabilities		17,492		17,492		29,842		29,842

(1) Includes indebtedness associated with real estate held for sale.

k. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

l. Office Leases

In accordance with FASB ASC Topic 842, “Leases”, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet at the lease commencement date for all leases, except those leases with terms of less than a year.  We lease corporate office space under leases with terms of up to 10 years and that may include extension options, but that do not include any residual value guarantees or restrictive covenants. As of September 30, 2021, we have $2,360 of operating lease right-of-use assets and $2,701 of operating lease liabilities related to our corporate office leases. The operating lease right-of-use assets are presented within other assets and the operating lease liabilities are presented within other liabilities in our consolidated balance sheet. We recorded $172 and $510 of total operating lease expense during the three and nine months ended September 30, 2021, which is recorded within property management expense and general and administrative expenses in our condensed consolidated statements of operations.    

m. Income Taxes

We have elected to be taxed as a REIT.  Accordingly, we recorded no income tax expense for the three and nine months ended September 30, 2021 and 2020.

To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders.  As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions.  Such an event could materially adversely affect our net income and net cash available for distribution to stockholders; however, we believe that we are organized and operate in such a manner as to qualify and maintain treatment as a REIT and intend to operate in such a manner so that we will remain qualified as a REIT for federal income tax purposes.  

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n. Recent Accounting Pronouncements

Below is a brief description of recent accounting pronouncements that could have a material effect on our financial statements.  

Adopted Within these Financial Statements

In March 2020, the FASB issued an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.  We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. 

NOTE 3: Investments in Real Estate

As of September 30, 2021, our investments in real estate consisted of 57 apartment properties that contain 16,109 units.  The following table summarizes our investments in real estate:   

	As of September 30, 2021			As of December 31, 2020			Depreciable Lives (In years)
Land	$	238,221		$	251,365			—
Building		1,525,395			1,527,535			40
Furniture, fixtures and equipment		141,144			137,870		5-10
Total investment in real estate	$	1,904,760		$	1,916,770
Accumulated depreciation		(223,244	)		(208,618	)
Investments in real estate, net	$	1,681,516		$	1,708,152

As of September 30, 2021, we owned six properties that were classified as held for sale. We expect the sale of these properties to close in the fourth quarter of 2021 or first quarter of 2022. The table below summarizes our held for sale properties.

Property Name	Location	Units		Net Carrying Value
Crestmont	Atlanta, GA	228		$	14,791
Creekside Corners	Atlanta, GA	444			44,478
Riverchase	Indianapolis, IN	216			17,672
Heritage Park	Oklahoma City, OK	453			16,405
Raindance	Oklahoma City, OK	504			13,163
Haverford Place	Louisville, KY	160			13,900
Total			2,005	$	120,409

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Acquisitions

The following table summarizes the aggregate relative fair value of the assets and liabilities associated with the properties acquired during the nine-month period ended September 30, 2021, on the date of acquisition, accounted for under FASB ASC Topic 805-50-15-3.

Description	Fair Value of Assets Acquired During the Nine Months Ended September 30, 2021
Assets acquired:
Investments in real estate (a)	$	139,336
Other assets		33
Intangible assets		757
Total assets acquired	$	140,126
Liabilities assumed:
Accounts payable and accrued expenses	$	795
Other liabilities		100
Total liabilities assumed		895
Estimated fair value of net assets acquired	$	139,231

(a) Included $177 of property related acquisition costs capitalized during the nine months ended September 30, 2021.

Dispositions

The following table summarizes the dispositions for the nine months ended September 30, 2021:

Property Name	Date of Sale	Sale Price		Gain on sale (1)
Kings Landing	07/28/2021	$	40,100	$	11,492
Total		$	40,100	$	11,492

(1) The gain for this property is net of $295 of debt prepayment costs.

NOTE 4: Indebtedness

The following tables contain summary information concerning our indebtedness as of September 30, 2021:

Debt:	Outstanding Principal		Unamortized Debt Issuance Costs			Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured credit facility (1)	$	137,503	$	(1,179	)	$	136,324	Floating	1.4%		1.6
Unsecured term loans		500,000		(2,156	)		497,844	Floating	1.3%		3.4
Mortgages (2)		385,508		(947	)		384,561	Fixed	3.8%		2.8
Total Debt	$	1,023,011	$	(4,282	)	$	1,018,729		2.3%		2.9

(1) The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.   

(2) Includes indebtedness associated with real estate held for sale.

On March 1, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $5,975. The property mortgage had a weighted-average rate of 5.7%.   

On April 5, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage and made partial

paydowns on another mortgage totaling $13,666. The property mortgages had a weighted-average rate of 4.2%.

On May 18, 2021, we entered into a Second Amended and Restated Credit Agreement which provided for a $550,000 unsecured credit facility (the “Facility) that consists of a $350,000 revolving line of credit (the “Unsecured Revolving Line of Credit”) and a new $200,000 senior term loan (the “New Unsecured Term Loan”). Additionally, we have the right to increase the aggregate amount of the Facility to up to $600,000, subject to certain terms and conditions. The maturity date on borrowings outstanding under the Unsecured Revolving Line of Credit is May 9, 2023, subject to our option to extend the revolving commitment for two additional 6-month periods under certain circumstances, including a payment of an extension fee. The maturity date on the New Unsecured Term Loan is May 18, 2026. We may prepay the Facility, in whole or in part, at any time without prepayment fee or penalty. At our option, borrowings under the Unsecured Revolving Line of Credit will bear interest at a rate equal to either (i) the 1-month LIBOR rate plus a margin of 125 to 200 basis points, or (ii) a base rate plus a margin of 25 to 100 basis points and borrowings under the New Unsecured

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Term Loan will bear interest at a rate equal to either (i) the LIBOR rate plus a margin of 120 to 190 basis points, or (ii) a base rate plus a margin of 20 to 90 basis points. The applicable margin is determined based upon our total consolidated leverage ratio. Substantially all of the proceeds of the New Unsecured Term Loan were applied at closing to repay the outstanding balance under the revolving credit facility established under the prior credit agreement. We recognized the refinance of the Unsecured Revolving Line of Credit as a modification of debt. The New Unsecured Term Loan was accounted for as an issuance of new debt. We incurred upfront costs of $1,200 associated with this transaction.

On July 1, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $18,650. The property mortgage had a weighted-average rate of 3.4%.  On July 30, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $15,991. The property mortgage had a weighted-average rate of 3.7%.

The following table contains summary information concerning our indebtedness as of September 30, 2021:

	Scheduled maturities on our indebtedness outstanding as of September 30, 2021
Debt:	2021		2022		2023		2024		2025		Thereafter
Unsecured credit facility	$	—	$	—	$	137,503	$	—	$	—	$	—
Unsecured term loans		—		—		—		300,000		—		200,000
Mortgages (1)		7,428		35,003		105,879		34,754		160,152		42,292
Total	$	7,428	$	35,003	$	243,382	$	334,754	$	160,152	$	242,292

(1) Includes indebtedness associated with real estate held for sale.

The following table contains summary information concerning our indebtedness as of December 31, 2020:

Debt:	Outstanding Principal		Unamortized Debt Issuance Costs			Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured credit facility (1)	$	184,802	$	(1,692	)	$	183,110	Floating	1.6%		2.4
Unsecured term loans		300,000		(1,241	)		298,759	Floating	1.5%		3.3
Mortgages		465,092		(1,275	)		463,817	Fixed	3.9%		3.2
Total Debt	$	949,894	$	(4,208	)	$	945,686		2.7%		3.1

(1) The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

During the nine months ended September 30, 2021, in connection with a property disposition, we extinguished a property mortgage totaling $19,618.

As of September 30, 2021, we were in compliance with all financial covenants contained in the documents governing our indebtedness.

On October 1, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $19,370. The property mortgage had a weighted-average rate of 3.4%.

NOTE 5: Derivative Financial Instruments

The following table summarizes the aggregate notional amounts and estimated net fair values of our derivative instruments as of September 30, 2021 and December 31, 2020:

	As of September 30, 2021						As of December 31, 2020
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swap	$	150,000	$	—		8,852	$	150,000	$	—	$	694
Interest rate collars		250,000		—		8,640		250,000		—		13,331
Forward interest rate swaps		—		1,168		—		—		—		15,817
Total	$	400,000	$	1,168		17,492	$	400,000	$	—	$	29,842

Effective interest rate swaps and caps are reported in accumulated other comprehensive income, and the fair value of these hedge agreements is recorded as derivative assets or liabilities on the face of our consolidated balance sheet.

For our interest rate swap and collars that are considered highly effective hedges, we reclassified realized losses of $1,926 and $4,939 to earnings within interest expense for the three and nine months ended September 30, 2021, respectively, and we expect $9,173 to be reclassified out of accumulated other comprehensive income to earnings over the next 12 months.

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NOTE 6: Stockholders’ Equity and Noncontrolling Interests

Stockholders’ Equity

On March 15, 2021, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on April 23, 2021 to common stockholders of record as of April 2, 2021.

On June 14, 2021, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on July 23, 2021 to common stockholders of record as of July 2, 2021.

On September 13, 2021, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on October 22, 2021 to common stockholders of record as of October 1, 2021.

During the three and nine months ended September 30, 2021, we also paid $0 and $278, respectively, of dividends on restricted common share awards that vested during the period.

On November 13, 2020, we entered into an equity distribution agreement pursuant to which we may from time to time offer and sell shares of our common stock having an aggregate offering price of up to $150,000 (the “ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Under the ATM Program, we may also enter into one or more forward sale transactions for the sale of shares of our common stock on a forward basis. During the fourth quarter of 2020 and the first half of 2021, we sold 2,932,000 shares on a forward basis under the ATM program. On June 29, 2021, the forward sale transactions were all physically settled and we issued 2,932,000 shares of common stock for a total of $41,671 in net proceeds.

On July 27, 2021, we entered into an underwriting agreement with Barclays Capital Inc. and BMO Capital Markets Corp., as representatives of the several underwriters named therein (collectively, the “Underwriters”), BMO Capital Markets Corp., in its capacity as agent (in such capacity, the “Forward Seller”) for Bank of Montreal, as forward counterparty (the “Forward Counterparty”) related to the offering of an aggregate of 16,100,000 shares of our common stock at a price to the Underwriters of $17.04 per share consisting of 16,100,000 shares of common stock offered by the Forward Seller in connection with the forward sale agreements described below (inclusive of 2,100,000 shares offered pursuant to the Underwriter’s option to purchase additional shares, which was exercised in full).  We did not initially receive any proceeds from the sale of our common stock by the Forward Seller. We completed the offering on July 30, 2021.

In connection with the offering, we also entered into two forward sale agreements. The first forward sale agreement (the “Initial Forward Sale Agreement”), dated July 27, 2021, with the Forward Seller and Forward Counterparty, and the second forward sale agreement (the “Additional Forward Sale Agreement”, together with the Initial Forward Sale Agreement, the “Forward Sale Agreements”), dated July 29, 2021, with the Forward Seller and the Forward Counterparty. In connection with the Forward Sale Agreements, the Forward Seller borrowed from third parties and sold to the Underwriters an aggregate of 16,100,000 shares of our common stock that was sold in the offering. As of September 30, 2021, 16,100,000 shares of our common stock remain to be settled under the Forward Sale Agreements, which if physically settled would provide additional proceeds to us of $272,156 based on the forward price as of September 30, 2021. We expect to physically settle the Forward Sale Agreements and receive proceeds from the sale of those shares upon one or more such physical settlements within approximately twelve months from the date of the prospectus, or July 30, 2022, the scheduled maturity date of the Forward Sale Agreements. Although we expect to settle the Forward Sale Agreements entirely by the physical delivery of shares of our common stock for cash proceeds, we may also elect to cash or net share settle all or a portion of our obligations under the Forward Sale Agreements, in which case, we may receive or owe cash or shares of our common stock from or to the Forward Seller. The Forward Sale Agreements provide for an initial forward sale price of $17.04 per share, subject to certain adjustments pursuant to the terms of each of the Forward Sale Agreements. The Forward Sale Agreements are subject to early termination or settlement under certain circumstances.    

We evaluated the accounting for the forward sale transactions under FASB ASC Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”.  As the forward sale transactions are considered indexed to our own equity and since they meet the equity classification conditions in ASC 815-40-25, the forward sale transactions have been classified as equity.   

We filed Articles of Amendment with the State Department of Assessments and Taxation of Maryland to increase the number of authorized shares of common stock, $0.01 par value, from 300,000,000 shares to 500,000,000 shares, effective July 27, 2021.

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Noncontrolling Interest

During the nine months ended September 30, 2021, holders of IROP units exchanged 122,155 units for 122,155 shares of our common stock. As of September 30, 2021, 552,360 IROP units held by unaffiliated third parties remain outstanding.

On March 15, 2021, our board of directors declared a dividend of $0.12 per unit, which was paid on April 23, 2021 to IROP LP unitholders of record as of April 2, 2021.

On June 14, 2021, our board of directors declared a dividend of $0.12 per unit, which was paid on July 23, 2021 to IROP LP unitholders of record as of July 2, 2021.

On September 13, 2021, our board of directors declared a dividend of $0.12 per unit, which was paid on October 22, 2021 to IROP LP unitholders of record as of October 1, 2021.

NOTE 7: Equity Compensation Plans

Long Term Incentive Plan

In May 2016, our shareholders approved and our board of directors adopted an amended and restated Long Term Incentive Plan (the “Incentive Plan”), which provides for the grants of awards to our employees, officers, directors, trustees, consultants or advisors (and those of our affiliates). The Incentive Plan authorizes the grant of restricted or unrestricted shares of our common stock, performance-based restricted share units (“PSUs”), non-qualified and incentive stock options, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), dividend equivalents and other stock- or cash-based awards. In conjunction with the amendment, the number of shares of common stock issuable under the Incentive Plan was increased to 4,300,000 shares and the term of the incentive plan was extended to May 12, 2026.  

Under the Incentive Plan, we have granted restricted shares, RSUs, and PSUs to our employees.  These awards generally vest or vested over a two- to four-year period.  In addition, we have granted unrestricted shares to our non-employee directors.  These awards generally vest or vested immediately. A summary of restricted common share award and RSU activity is presented below.    

	2021
	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Balance, January 1,		406,849		$	11.68
Granted		212,438			14.42
Vested		(200,559	)		11.74
Forfeited		(29,664	)		13.45
Balance, September 30, (1)		389,064		$	13.01

(1) The outstanding award balance above included 135,366 and 67,381 RSUs as of September 30, 2021 and December 31, 2020, respectively.

On February 18, 2021, our compensation committee awarded 254,493 PSUs to our named executive officers. The number of PSUs earned will be based on attainment of certain performance criteria over a three-year period, with the actual number of shares issuable ranging between 0 and 150% of the number of PSUs granted. Half of any PSUs earned will vest, and shares will be issued in respect thereof, immediately following the end of the three-year performance period; the remaining half of any PSUs earned will vest, and shares will be issued in respect thereof, after an additional one-year period of service.

During the nine months ended September 30, 2021 and 2020, a portion of the RSUs and PSUs granted were issued to employees who are retirement eligible. The fact that the grantees are retirement eligible resulted in immediate recognition of the associated stock-based compensation expense totaling $2,112 and $1,667, respectively.

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NOTE 8: Earnings Per Share

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income	$	11,564		$	1,092		$	16,064		$	1,517
Income allocated to noncontrolling interest		(62	)		(2	)		(90	)		(10	)
Net income allocable to common shares		11,502			1,090			15,974			1,507
Weighted-average shares outstanding—Basic		104,918,674			94,456,987			102,882,723			93,261,757
Weighted-average shares outstanding—Diluted		107,668,675			95,222,623			104,062,661			94,099,091
Earnings per share—Basic	$	0.11		$	0.01		$	0.16		$	0.02
Earnings per share—Diluted	$	0.11		$	0.01		$	0.15		$	0.02

Certain IROP units, restricted stock awards, RSUs, PSUs, and forward sale agreements were excluded from the earnings (loss) per share computation because their effect would have been anti-dilutive, totaling 552,360 and 552,360 for the three and nine months ended September 30, 2021, respectively, and 7,653,516 and 7,645,986 for the three and nine months ended September 30, 2020, respectively.

NOTE 9: Other Disclosures

Risks and Uncertainties

Currently, one of the most significant risks and uncertainties is the duration and scope of the ongoing COVID-19 pandemic, which has disrupted businesses and slowed economic activity. In response to the COVID-19 pandemic, we have made operational and policy changes to: (1) comply with governmental mandates, including eviction moratoria, on a jurisdiction by jurisdiction basis; (2) protect our employees, residents, and prospective residents; and (3) minimize the adverse financial impact to us. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors, many of which are not within management’s control, and that we are unable to predict at this time, including but not limited to: (1) the duration and scope of the COVID-19 pandemic; (2) the COVID-19 pandemic’s impact on current and future economic activity; and (3) the actions of governments, businesses and individuals in response to the COVID-19 pandemic.

Litigation

We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.

Loss Contingencies

We record an accrual for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. Management reviews these accruals quarterly and makes revisions based on changes in facts and circumstances. When a loss contingency is not both probable and reasonably estimable, management does not accrue the loss. However, if the loss (or an additional loss in excess of an earlier accrual) is at least a reasonable possibility and material, then management discloses a reasonable estimate of the possible loss, or range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible loss, or range of loss, then a statement to that effect is disclosed.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The Securities and Exchange Commission (the “SEC”), encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report contains or incorporates by reference such “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.

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Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements.

We claim the protection of the safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this report and they may also be incorporated by reference in this report to other documents filed with the SEC, and include, without limitation, statements about future financial and operating results and performance, statements about our plans, objectives, expectations and intentions with respect to future operations, products and services, and other statements that are not historical facts. These forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the anticipated results discussed in these forward-looking statements.

Factors that might cause actual results to differ materially from our expectations, many of which may be more likely to impact us as a result of the ongoing COVID-19 pandemic, are set forth in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2020 and in other of our public filings with the SEC and could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.

Overview

Our Company

We are a self-administered and self-managed Maryland real estate investment trust (“REIT”), that acquires, owns, operates, improves and manages multifamily apartment communities across non-gateway U.S. markets.  As of September 30, 2021, we owned and operated 57 multifamily apartment properties that contain 16,109 units. Our properties are located in Georgia, North Carolina, Tennessee, Kentucky, Ohio, Oklahoma, Indiana, Texas, Florida, South Carolina, and Alabama. We do not have any foreign operations and our business is not seasonal. Our executive offices are located at 1835 Market Street, Suite 2601, Philadelphia, PA 19103 and our telephone number is (267) 270-4800. We have offices in Philadelphia, Pennsylvania and Chicago, Illinois.

Our Business Objective and Investment Strategies

Our primary business objective is to maximize stockholder value through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation.  Our investment strategy is focused on the following:

• gaining scale within key amenity rich submarkets of non-gateway cities that offer good school districts, high-quality retail and major employment centers and are unlikely to experience substantial new apartment construction in the foreseeable future;

• increasing cash flows at our existing apartment properties through prudent property management and strategic renovation projects; and

• acquiring additional properties that have strong and stable occupancies and support a rise in rental rates or that have the potential for repositioning through capital expenditures or tailored management strategies.

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Property Portfolio 

As of September 30, 2021, we owned 57 multifamily apartment properties, totaling 16,109 units.  Below is a summary of our property portfolio by market.  

(Dollars in thousands, except per unit data)	As of September 30, 2021									For the Three Months Ended September 30,
Market	Number of Properties		Units		Gross Real Estate Assets		Period End Occupancy			Average Effective Monthly Rent per Unit		Net Operating Income		% of NOI
Atlanta, GA		6		2,020	$	264,430		96.6	%	$	1,323	$	5,281		14.1	%
Raleigh - Durham, NC		6		1,690		249,887		95.7	%		1,266		4,495		12.0	%
Memphis, TN		4		1,383		152,457		94.0	%		1,295		3,536		9.5	%
Dallas, TX		5		1,307		186,483		97.7	%		1,449		3,267		8.8	%
Columbus, OH		6		1,547		204,920		95.8	%		1,135		3,243		8.7	%
Louisville, KY		6		1,710		214,411		94.0	%		1,066		3,127		8.4	%
Tampa-St. Petersburg, FL		4		1,104		159,840		95.7	%		1,409		2,902		7.8	%
Oklahoma City, OK		5		1,658		80,594		97.1	%		738		2,263		6.1	%
Huntsville, AL		2		599		92,532		97.6	%		1,345		1,787		4.8	%
Indianapolis, IN		4		916		110,217		96.8	%		1,145		1,878		5.0	%
Myrtle Beach, SC - Wilmington, NC		3		628		65,946		96.0	%		1,137		1,495		4.0	%
Charlotte, NC		2		480		80,383		96.7	%		1,363		1,351		3.6	%
Charleston, SC		2		518		108,839		96.4	%		1,370		1,265		3.4	%
Orlando, FL		1		297		49,489		96.5	%		1,483		783		2.1	%
Asheville, NC		1		252		29,059		97.9	%		1,205		652		1.7	%
Total/Weighted Average		57		16,109	$	2,049,487		96.0	%	$	1,212	$	37,325		100.0	%

As of September 30, 2021, our same-store portfolio consisted of 47 multifamily apartment properties, totaling 12,838 units.  See “Non-GAAP Financial Measures – Same Store Portfolio Net Operating Income” below for our definition of same store and definitions and reconciliations related to our net operating income and net operating income margin. 

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Current Developments

Pending Merger

On July 26, 2021, we, together with IROP, and IRSTAR Sub, LLC, a wholly-owned subsidiary of IRT (“IRT Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”) with Steadfast Apartment REIT, Inc. (“STAR”) and its operating partnership, Steadfast Apartment REIT Operating Partnership, L.P. (“STAR OP”).

On the terms, and subject to the conditions of, the Merger Agreement, STAR will merge with and into IRT Merger Sub (the “REIT Merger”), with IRT Merger Sub surviving the REIT Merger as a wholly-owned subsidiary of IRT; and immediately thereafter, STAR OP will merge with and into IROP (the “Partnership Merger” and, together with the REIT Merger, the “Mergers”), with IROP surviving the Partnership Merger.

In the REIT Merger, each outstanding share of STAR common stock, par value $0.01 per share (“STAR common stock”) will be converted automatically into the right to receive 0.905 (the “Exchange Ratio”) of a newly issued share of IRT common stock, par value $0.01 per share (“IRT common stock”). In the Partnership Merger, each outstanding unit of limited partnership of STAR OP (each, an “STAR OP common unit”) will be converted into the right to receive the Exchange Ratio of a newly issued common unit of limited partnership of IROP (each, an “IROP common unit”). Consummation of the Mergers is subject to customary closing conditions, including, among others, receipt of IRT stockholder approval and STAR stockholder approval and we currently expect the Mergers to close in December 2021.

In conjunction with the Mergers, we have incurred approximately $5.3 million in merger-related transaction costs during the three and nine months ended September 30, 2021. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees. These costs are presented in a separate line item on the face of the condensed consolidated statements of operations.  

Capital Recycling

Our capital recycling program consists of disposing of assets in markets where we lack scale and/or markets where management believes that growth is slowing.

In May 2021, we purchased a 272-unit located in Charlotte, NC for $66.5 million.

In June 2021, we purchased a 322-unit located in McKinney, TX for $73.4 million.

In July 2021, we sold a 152-unit located in St. Louis, MO for $40.1 million. We recognized a gain of $11.5 million on this disposition.

As of September 30, 2021, we had six properties that were classified as held for sale. We expect the sale of these properties to close in the fourth quarter of 2021 or the first quarter of 2022. We intend to use proceeds from the sales to repay debt of the combined company at or shortly after the closing of our proposed merger with STAR.

Investment in unconsolidated real estate entities

In June 2021, we closed on our initial investment in a joint venture to develop a 402-unit community in Richmond, VA, which

is expected to be completed in the first half of 2023. Our initial investment was $10.2 million and we are expecting to contribute a total of $16.4 million in the joint venture.

In September 2021, we closed on our second investment in a joint venture to develop a 504-unit portfolio in Nashville, TN, which is expected to be completed in the second half of 2022. Our initial investment was $1.4 million and we are expecting to contribute a total of $14.4 million in the joint venture.

Value Add

Value add initiatives, comprised of renovations and upgrades at selected communities to drive increased rental rates, remain a core component of our longer-term growth strategy. As of September 30, 2021, we had identified 7,851 units across 26 properties for renovations and upgrades as part of our value add initiative. This includes 1,295 units across 5 properties that were added to our value add program in September 2021 and whose renovations are expected to commence in 2022. As of September 30, 2021, we had renovated 4,419 of the 7,851 units at an average cost per unit of $12,783 and achieved a return on our total renovation costs for these units of 17.6% (and approximately 19.8% on the interior portion of such renovation costs).  We expect to complete the remaining value add projects at the selected communities throughout 2021, 2022, and 2023.

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Capital Markets

Forward Sale Agreements

On July 27, 2021, we entered into an underwriting agreement with Barclays Capital Inc. and BMO Capital Markets Corp., as representatives of the several underwriters named therein (collectively, the “Underwriters”), BMO Capital Markets Corp., in its capacity as agent (in such capacity, the “Forward Seller”) for Bank of Montreal, as forward counterparty (the “Forward Counterparty”) related to the offering of an aggregate of 16.1 million shares of our common stock, at a price to the Underwriters of $17.04 per share consisting of 16.1 million shares of common stock offered by the Forward Seller in connection with the forward sale agreements described below (inclusive of 2.1 million shares offered pursuant to the Underwriter’s option to purchase additional shares, which was exercised in full).  We did not initially receive any proceeds from the sale of our common stock by the Forward Seller. We completed the offering on July 30, 2021.

In connection with the offering, we also entered into two forward sale agreements. The first forward sale agreement (the “Initial Forward Sale Agreement”), dated July 27, 2021, with the Forward Seller and Forward Counterparty, and the second forward sale agreement (the “Additional Forward Sale Agreement”, together with the Initial Forward Sale Agreement, the “Forward Sale Agreements”), dated July 29, 2021, with the Forward Seller and the Forward Counterparty. In connection with the Forward Sale Agreements, the Forward Seller borrowed from third parties and sold to the Underwriters an aggregate of 16.1 million shares of our common stock that was sold in the offering. As of September 30, 2021, 16.1 million shares of our common stock remain to be settled under the Forward Sale Agreements, which, if physically settled, would provide additional proceeds to us of $272.2 million based on the forward price as of September 30, 2021. We expect to physically settle the Forward Sale Agreements and receive proceeds from the sale of those shares upon one or more such physical settlements within approximately twelve months from the date of the prospectus, or July 30, 2022, the scheduled maturity date of the Forward Sale Agreements. Although we expect to settle the Forward Sale Agreements entirely by the physical delivery of shares of our common stock for cash proceeds, we may also elect to cash or net share settle all or a portion of our obligations under the Forward Sale Agreements, in which case, we may receive or owe cash or shares of our common stock from or to the Forward Seller. The Forward Sale Agreements provide for an initial forward sale price of $17.04 per share, subject to certain adjustments pursuant to the terms of each of the Forward Sale Agreements. The Forward Sale Agreements are subject to early termination or settlement under certain circumstances.

Results of Operations

Three Months Ended September 30, 2021 compared to the Three Months Ended September 30, 2020

	SAME STORE PROPERTIES												NON SAME STORE PROPERTIES												CONSOLIDATED
(Dollars in thousands)	Three Months Ended September 30,												Three Months Ended September 30,												Three Months Ended September 30,
	2021			2020			Increase (Decrease)			% Change			2021			2020			Increase (Decrease)			% Change			2021			2020			Increase (Decrease)			% Change
Property Data:
Number of properties	47			47									10			11				(1	)		-9.1	%	57			58				(1	)		-1.7	%
Number of units		12,838			12,838									3,271			2,967			304			10.2	%		16,109			15,805			304			1.9	%
Average occupancy		96.0	%		93.8	%		2.2	%	n/a				96.9	%		95.2	%		1.7	%	n/a				96.1	%		94.1	%		2.0	%	n/a
Average effective monthly rent, per unit		1,227			1,143			84			7.3	%		1,154			982			172			17.5	%		1,212			1,118			94			8.4	%
Revenue:
Rental and other property revenue		48,942			44,734			4,208			9.4	%		11,650			9,267			2,383			25.7	%	$	60,592		$	54,001		$	6,591			12.2	%
Expenses:
Property operating expenses		18,492			18,187			305			1.7	%		4,672			3,942			730			18.5	%		23,164			22,129			1,035			4.7	%
Net Operating Income	$	30,450		$	26,547		$	3,903			14.7	%	$	6,978		$	5,325		$	1,653			31.0	%	$	37,428		$	31,872		$	5,556			17.4	%
Other Revenue:
Other revenue																									$	188		$	199		$	(11	)		-5.5	%
Corporate and other expenses:
Property management expenses																										2,199			2,078			121			5.8	%
General and administrative expenses																										3,985			2,912			1,073			36.8	%
Depreciation and amortization expense																										17,384			15,232			2,152			14.1	%
Total corporate and other expenses																									$	23,568		$	20,222		$	3,346			16.5	%
Interest expense																										(8,700	)		(8,917	)		217			2.4	%
Gain on sale (loss on impairment) of real estate assets, net																										11,492			(1,840	)		13,332			724.6	%
Merger and integration costs																										(5,276	)		—			(5,276	)	nm
Net income																									$	11,564		$	1,092		$	10,472			959.0	%
Income allocated to noncontrolling interests																										(62	)		(2	)		(60	)	nm
Net income available to common shares																									$	11,502		$	1,090		$	10,412			955.2	%

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Revenue

Rental and other property revenue. Revenue from rental and other property revenue of the consolidated portfolio increased $6.6 million to $60.6 million for the three months ended September 30, 2021 from $54.0 million for the three months ended September 30, 2020. The increase was primarily attributable to a $4.2 million increase in same store rental and other property revenue driven by a 7.3% increase in average effective monthly rents and a 220-basis point increase in average occupancy compared to the prior year period. In addition, there was a $2.4 million increase in non-same store rental and other property revenue primarily driven by our recent property acquisitions having a higher average effective rent per unit and higher occupancy than recent property dispositions.

Expenses

Property operating expenses. Property operating expenses increased $1.1 million to $23.2 million for the three months ended September 30, 2021 from $22.1 million for the three months ended September 30, 2020. The increase was primarily due to a $0.3 million increase in same store property operating expenses and a $0.8 million increase in non-same store property operating expenses.

Property management expenses. Property management expenses increased $0.1 million to $2.2 million for the three months ended September 30, 2021 from $2.1 million for the three months ended September 30, 2020.

General and administrative expenses. General and administrative expenses increased $1.1 million to $4.0 million for the three months ended September 30, 2021 from $2.9 million for the three months ended September 30, 2020. This increase was primarily due to an increase in compensation expense and stock-based compensation compared to the prior year primarily due to incentive compensation due to company performance.

Depreciation and amortization expense. Depreciation and amortization expense increased $2.2 million to $17.4 million for the three months ended September 30, 2021 from $15.2 million for the three months ended September 30, 2020. The increase was primarily attributable to a $0.8 million increase in depreciation expense at our value add properties for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and $1.3 million in depreciation expense for properties acquired since September 30, 2020.

Interest expense. Interest expense decreased $0.2 million to $8.7 million for the three months ended September 30, 2021 from $8.9 million for the three months ended September 30, 2020 primarily due to lower interest rates.

Merger and integration costs. In connection with our proposed merger with STAR, we incurred approximately $5.2 million of merger-related transaction costs during the three months ended September 30, 2021. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees.

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Nine Months Ended September 30, 2021 compared to the Nine Months Ended September 30, 2020

	SAME STORE PROPERTIES												NON SAME STORE PROPERTIES												CONSOLIDATED
(Dollars in thousands)	For the Nine Months Ended September 30,												For the Nine Months Ended September 30,												For the Nine Months Ended September 30,
	2021			2020			Increase (Decrease)			% Change			2021			2020			Increase (Decrease)			% Change			2021			2020			Increase (Decrease)			% Change
Property Data:
Number of properties	47			47									10				11			(1	)		-9.1	%	57				58			(1	)		-1.7	%
Number of units		12,838			12,838									3,271			2,967			304			10.2	%		16,109			15,805			304			1.9	%
Average occupancy		95.6	%		92.9	%		2.7	%	n/a				96.5	%		94.2	%		2.4	%	n/a				95.8	%		93.2	%		2.6	%	n/a
Average effective monthly rent, per unit		1,190			1,138			52			4.6	%		1,100			974			126			13.0	%		1,175			1,107			68			6.1	%
Revenue:
Rental and other property revenue	$	141,767		$	131,482		$	10,285			7.8	%	$	30,922		$	25,762		$	5,160			20.0	%	$	172,689		$	157,244		$	15,445			9.8	%
Expenses:
Property operating expenses		54,329			52,042			2,287			4.4	%		11,971			10,798			1,173			10.9	%		66,300			62,840			3,460			5.5	%
Net Operating Income	$	87,438		$	79,440		$	7,998			10.1	%	$	18,951		$	14,964		$	3,987			26.6	%	$	106,389		$	94,404		$	11,985			12.7	%
Other Revenue:
Other revenue																									$	647		$	574		$	73			12.7	%
Corporate and other expenses:
Property management expenses																										6,318			6,311			7			0.1	%
General and administrative expenses																										14,168			11,862			2,306			19.4	%
Depreciation and amortization expense																										50,699			45,291			5,408			11.9	%
Abandoned deal costs																										—			130			(130	)	nm
Casualty losses																										359			411			(52	)		-12.7	%
Total corporate and other expenses																									$	71,544		$	64,005		$	7,539			11.8	%
Interest expense																										(25,644	)		(27,616	)		1,972			7.1	%
Gain on sale (loss on impairment) of real estate assets, net																										11,492			(1,840	)		13,332			724.6	%
Merger and integration costs																										(5,276	)		—			(5,276	)	nm
Net income																									$	16,064		$	1,517		$	14,547			958.9	%
Income allocated to noncontrolling interests																										(90	)		(10	)		(80	)		-800.0	%
Net income available to common shares																									$	15,974		$	1,507		$	14,467			960.0	%

Revenue

Rental and other property revenue. Revenue from rental and other property revenue of the consolidated portfolio increased $15.5 million to $172.7 million for the nine months ended September 30, 2021 from $157.2 million for the nine months ended September 30, 2020. The increase was primarily attributable to a $10.3 million increase in same store rental and other property revenue driven by a 4.6% increase in average effective monthly rents and a 270-basis point increase in average occupancy compared to the prior year period. In addition, there was a $5.2 million increase in non-same store rental and other property revenue primarily driven by our recent property acquisitions having a higher average effective rent per unit and higher occupancy than recent property dispositions.

Expenses

Property operating expenses. Property operating expenses increased $3.5 million to $66.3 million for the nine months ended September 30, 2021 from $62.8 million for the nine months ended September 30, 2020. The increase was primarily due to a $2.3 million increase in the same store property operating expenses, primarily related to an increase in repairs and maintenance, property insurance, utilities, contract services, and personnel costs during the nine months ended September 30, 2021 and a $1.2 million increase in non-same store property operating expenses.

Property management expenses. Property management expenses remained consistent at $6.3 million for the nine months ended September 30, 2021 and 2020.

General and administrative expenses. General and administrative expenses increased $2.3 million to $14.2 million for the nine months ended September 30, 2021 from $11.9 million for the nine months ended September 30, 2020. This increase was primarily due to a $2.0 million increase in compensation expense, primarily due to incentive compensation due to company performance.

Depreciation and amortization expense. Depreciation and amortization expense increased $5.4 million to $50.7 million for the nine months ended September 30, 2021 from $45.3 million for the nine months ended September 30, 2020. The increase was primarily attributable to a $2.9 million increase in depreciation expense at our value add properties for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 and $2.4 million in depreciation expense for properties acquired since September 30, 2020.

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Interest expense. Interest expense decreased $2.0 million to $25.6 million for the nine months ended September 30, 2021 from $27.6 million for the nine months ended September 30, 2020. The decrease was primarily due to lower interest rates during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Merger and integration costs. In connection with our proposed merger with STAR, we incurred approximately $5.2 million of merger-related transaction costs during the nine months ended September 30, 2021. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees.

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Non-GAAP Financial Measures

Funds from Operations (FFO) and Core Funds from Operations (CFFO)

We believe that FFO and Core FFO (“CFFO”), each of which is a non-GAAP financial measure, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. While our calculation of FFO is in accordance with NAREIT’s definition, it may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to FFO computations of such other REITs.

We updated our definition of CFFO during the three months ended March 31, 2021 to the definition described below. All prior periods have been adjusted to conform to the current CFFO definition.  

CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including depreciation and amortization of other items not included in FFO, and other non-cash or non-operating gains or losses related to items such as merger and integration costs, casualty losses, abandoned deal costs and debt extinguishment costs from the determination of FFO.

Our calculation of CFFO may differ from the methodology used for calculating CFFO by other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance, and believe they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash or non-recurring items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and our operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we believe that FFO and CFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Accordingly, FFO and CFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization and capital improvements. Neither FFO nor CFFO should be considered as an alternative to net income or any other GAAP measurement as an indicator of our operating performance or as an alternative to cash flow from operating, investing, and financing activities as a measure of our liquidity.

Set forth below is a reconciliation of net income (loss) to FFO and CFFO for the three and nine months ended September 30, 2021 and 2020 (in thousands, except share and per share information): 

	For the Three Months Ended September 30, 2021						For the Three Months Ended September 30, 2020
	Amount			Per Share (1)			Amount		Per Share (2)
Funds From Operations (FFO):
Net income (loss)	$	11,564		$	0.11		$	1,092	$	0.01
Adjustments:
Real estate depreciation and amortization		17,263			0.16			15,155		0.16
Net loss on impairment (gain on sale) of real estate assets excluding debt extinguishment costs		(11,788	)		(0.11	)		1,840		0.02
FFO	$	17,039		$	0.16		$	18,087	$	0.19
Core Funds From Operations (CFFO):
FFO	$	17,039		$	0.16		$	18,087	$	0.19
Adjustments:
Other depreciation and amortization		121			—			77		—
Prepayment penalties on asset dispositions		295			—			—		—
Merger and integration costs		5,276			0.05			—		—
CFFO	$	22,731		$	0.21		$	18,164	$	0.19

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	For the Nine Months Ended September 30, 2021						For the Nine Months Ended September 30, 2020
	Amount			Per Share (1)			Amount		Per Share (2)
Funds From Operations (FFO):
Net income (loss)	$	16,064		$	0.16		$	1,517		0.02
Adjustments:
Real estate depreciation and amortization		50,418			0.49		$	45,036		0.47
Net loss on impairment (gain on sale) of real estate assets excluding debt extinguishment costs		(11,788	)		(0.12	)	$	1,840		0.02
FFO	$	54,694		$	0.53		$	48,393	$	0.51
Core Funds From Operations (CFFO):
FFO	$	54,694		$	0.53		$	48,393	$	0.51
Adjustments:
Other depreciation and amortization		281			—			225		—
Abandoned deal costs		—			—			130		—
Prepayment penalties on asset dispositions		295			—			—		—
Merger and integration costs		5,276			0.05			—		—
Casualty losses		359			0.01			411		0.01
CFFO	$	60,905		$	0.59		$	49,159	$	0.52

(1) Based on 107,094,044 and 103,511,115 weighted-average shares and units outstanding for the three and nine months ended September 30, 2021, respectively.

(2) Based on 95,227,176 and 94,061,963 weighted-average shares and units outstanding for the three and nine months ended September 30, 2020, respectively.

Same Store Portfolio Net Operating Income

We believe that Net Operating Income (“NOI”), a non-GAAP financial measure, is a useful supplemental measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding interest expenses, depreciation and amortization, property management expenses, and general and administrative expenses. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income insofar as the measure reflects only operating income and expense at the property level. We use NOI to evaluate performance on a same store and non-same store basis because NOI measures the core operations of property performance by excluding corporate level expenses, financing expenses, and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.

We review our same store portfolio at the beginning of each calendar year.  Properties are added into the same store portfolio if they were owned at the beginning of the previous year.  Properties that are held-for-sale or have been sold are excluded from the same store portfolio.

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Set forth below is a reconciliation of same store net operating income to net income (loss) available to common shares for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per unit data):

	Three Months Ended September 30, (a)									Nine Months Ended September 30, (a)
	2021			2020			% change			2021			2020			% change
Revenue:
Rental and other property revenue	$	48,942		$	44,734			9.4	%	$	141,767		$	131,482			7.8	%
Property Operating Expenses
Real estate taxes		5,384			5,778			-6.8	%		17,202			17,293			-0.5	%
Property insurance		1,107			1,019			8.6	%		3,221			2,830			13.8	%
Personnel expenses		4,434			4,293			3.3	%		12,507			12,116			3.2	%
Utilities		2,584			2,505			3.2	%		7,363			7,099			3.7	%
Repairs and maintenance		2,124			1,815			17.0	%		5,551			4,642			19.6	%
Contract services		1,894			1,814			4.4	%		5,565			5,253			5.9	%
Advertising expenses		474			502			-5.6	%		1,415			1,382			2.4	%
Other expenses		491			461			6.5	%		1,505			1,427			5.5	%
Total property operating expenses		18,492			18,187			1.7	%		54,329			52,042			4.4	%
Net operating income	$	30,450		$	26,547			14.7	%	$	87,438		$	79,440			10.1	%
NOI Margin		62.2	%		59.3	%		2.9	%		61.7	%		60.4	%		1.3	%
Average Occupancy		96.0	%		93.8	%		2.2	%		95.6	%		92.9	%		2.7	%
Average effective monthly rent, per unit	$	1,227		$	1,143			7.3	%	$	1,190		$	1,138			4.6	%
Reconciliation of Same-Store Net Operating Income to Net Income (Loss)
Same-store portfolio net operating income (a)	$	30,450		$	26,547					$	87,438			79,440
Non same-store net operating income		6,978			5,325						18,951			14,964
Other revenue		188			199						647			574
Property management expenses		(2,199	)		(2,078	)					(6,318	)		(6,311	)
General and administrative expenses		(3,985	)		(2,912	)					(14,168	)		(11,862	)
Depreciation and amortization		(17,384	)		(15,232	)					(50,699	)		(45,291	)
Abandoned deal costs		—			—						—			(130	)
Casualty losses		—			—						(359	)		(411	)
Interest expense		(8,700	)		(8,917	)					(25,644	)		(27,616	)
Gain on sale (loss on impairment) of real estate assets, net		11,492			(1,840	)					11,492			(1,840	)
Merger and integration costs		(5,276	)		—						(5,276	)		—
Net income (loss)	$	11,564		$	1,092					$	16,064		$	1,517

(a) Same store portfolio for the three and nine months ended September 30, 2021 and 2020 included 47 properties containing 12,838 units.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, pay distributions and other general business needs.  We believe our available cash balances, financing arrangements and cash flows from operations will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next twelve months and the foreseeable future.

Our primary cash requirements are to:

• make investments to continue our value add initiatives to improve the quality and performance of our properties;

• repay our indebtedness;

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• fund costs necessary to maintain our properties;

• pay our operating expenses; and

• distribute a minimum of 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gain) and to make investments in a manner that enables us to maintain our qualification as a REIT.

We intend to meet our liquidity requirements primarily through a combination of one or more of the following:

• the use of our cash and cash equivalents of $8.7 million as of September 30, 2021;

• existing and future unsecured financing, including advances under our unsecured credit facility, and financing secured directly or indirectly by the apartment properties in our portfolio;

• cash generated from operating activities;

• net cash proceeds from property sales, including sales undertaken as part of our capital recycling strategy and other sales; and

• proceeds from the sales of our common stock and other equity securities, including common stock that we expect to issue in settlement of our forward sale agreement.

Cash Flows

As of September 30, 2021 and 2020, we maintained cash and cash equivalents, and restricted cash of approximately $14.9 million and $17.1 million, respectively. Our cash and cash equivalents were generated from the following activities (dollars in thousands):

	For the Nine Months Ended September 30,
	2021			2020
Cash flow from operating activities	$	73,725		$	60,566
Cash flow from investing activities		(145,437	)		(78,433	)
Cash flow from financing activities		72,955			20,543
Net change in cash and cash equivalents, and restricted cash		1,243			2,676
Cash and cash equivalents, and restricted cash, beginning of period		13,615			14,433
Cash and cash equivalents, and restricted cash, end of the period	$	14,858		$	17,109

Our cash inflows from operating activities during the nine months ended September 30, 2021 and 2020 were primarily driven by ongoing operations of our properties.  

Our cash outflows from investing activities during the nine months ended September 30, 2021 were primarily due to two property acquisitions, our two investments in unconsolidated real estate entities, and capital expenditures. These items were partially offset by inflows related to one property disposition. Our cash outflows from investing activities during the nine months ended September 30, 2020 were primarily due to one property acquisition and capital expenditures.

Our cash inflows from financing activities during the nine months ended September 30, 2021 were primarily due to the issuance of a $200.0 million unsecured term loan, $187.5 million of draws on our unsecured credit facility, and a $41.5 million settlement on our forward sale agreements, partially offset by $234.8 million of repayments on our unsecured credit facility, $80.0 million of property mortgage payments and the payment of dividends on our common stock and distributions on noncontrolling interests totaling $37.5 million. Our cash inflows from financing activities during the nine months ended September 30, 2020 were primarily due to $99.5 million of draws on our unsecured credit facility and a $50.0 million settlement on our forward sale agreements, partially offset by the payment of dividends on our common stock and distributions on noncontrolling interests and $44.0 million of repayments on our unsecured credit facility.

Contractual Commitments

Our 2020 Annual Report on Form 10-K includes a table of contractual commitments. There were no material changes to these commitments since the filing of our Annual Report on Form 10-K.

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Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements during the nine months ended September 30, 2021 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

Critical Accounting Estimates and Policies

Our 2020 Annual Report on Form 10-K contains a discussion of our critical accounting policies. Management discusses our critical accounting policies and management’s judgments and estimates with the audit committee of our board of directors. There were no material changes to our critical accounting policies since the filing of our Annual Report on form 10-K.

Item 3. Qualitative and Quantitative Disclosure About Market Risk.

Our 2020 Annual Report on Form 10-K contains a discussion of qualitative and quantitative market risks. There have been no material changes in quantitative and qualitative market risks during the nine months ended September 30, 2021 from the disclosures included in our 2020 Annual Report on Form 10-K.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  

Effective as of September 30, 2021, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation referred to above during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors.

The risks set out below represent changes to risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020. The information in this Quarterly Report on Form 10-Q should be read in conjunction with the other factors described in “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Unless otherwise stated in these risk factors or the context otherwise requires, references in these risk factors to:

• “Code” are to the Internal Revenue Code of 1986, as amended;

• “combined company” are to IRT and its consolidated subsidiaries after consummation of the pending Mergers;

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• “Company Merger” are to the merger of STAR with and into IRT Merger Sub, with IRT Merger Sub surviving the merger;

• “IRT common stock” are to shares of common stock, par value $0.01 per share, of IRT;

• “IRT Merger Sub” are to IRSTAR Sub, LLC, a Maryland limited liability company wholly-owned by IRT;

• “IRT parties” are to IRT, IRT OP and IRT Merger Sub;

• “Merger Agreement” are to the Agreement and Plan of Merger dated as of July 26, 2021, by and among the IRT parties and STAR parties;

• “Mergers” are to both the Company Merger and the Partnership Merger;

• “Partnership Merger” are to the merger of STAR OP with and into IROP, with IROP surviving the merger;

• “STAR” are to Steadfast Apartment REIT, Inc., a Maryland corporation;

• “STAR common stock” are to shares of common stock, par value $0.01 per share, of STAR;

• “STAR OP” are to Steadfast Apartment REIT Operating Partnership, L.P., a Delaware limited partnership;

• “STAR OP Units” are to units of limited partnership interest in Steadfast OP; and

• “STAR parties” are to both Steadfast and Steadfast OP.

Risks Relating to the Mergers

The Mergers may not be consummated on the terms or timeline currently contemplated, or at all. Consummation of the Mergers is subject to many conditions and if these conditions are not satisfied or waived, the Mergers will not be consummated, which could adversely affect the businesses of IRT, and, in certain circumstances, result in the requirement that IRT pay a termination fee or certain expense reimbursement.

Consummation of the Mergers is subject to certain conditions, including: (1) the receipt of required approvals from IRT’s common stockholders and from STAR’s common stockholders, (2) the authorization for listing of the shares of IRT common stock to be issued in the Mergers or reserved for issuance in connection therewith on the New York Stock Exchange, (3) the effectiveness of the registration statement on Form S-4 that we filed with the SEC, (4) the absence of any order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Mergers or any law that makes the consummation of the Mergers illegal, (5) the accuracy of each party’s representations and warranties, subject in most cases to materiality or material adverse effect qualifications, (6) material compliance with each party’s covenants (7) the receipt by each of IRT and STAR of an opinion to the effect that the Company Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and of an opinion as to the qualification of IRT and STAR, respectively, as a REIT under the Code and (8) the receipt of certain lender consents.

IRT cannot provide assurance that the conditions to consummation of the Mergers will be satisfied or waived, and accordingly, that the Mergers will be consummated on the terms or timeline that the parties anticipate, or at all. IRT or STAR may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Mergers are not consummated by January 31, 2022.

Failure to consummate the Mergers may adversely affect IRT’s results of operations, financial condition and business prospects for many reasons, including, among others:

• IRT will have incurred substantial costs relating to the Mergers, such as legal, accounting, financial advisor, filing, printing and mailing fees and integration costs that have already been incurred or will continue to be incurred until the closing of the Mergers, which could adversely affect its financial condition, results of operations and ability to make distributions to its stockholders and to pay the principal of and interest on its outstanding indebtedness;

• the Mergers, whether or not they close, will divert the attention of the management of IRT instead of enabling them to more fully pursue other opportunities that could be beneficial to IRT, without realizing any of the benefits of having consummated the Mergers or the other transactions contemplated by the Merger Agreement; and

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• any reputational harm due to the adverse perception of any failure to successfully consummate the Mergers. In addition, if the Merger Agreement is terminated under certain circumstances specified therein, IRT may be required to pay the STAR parties a $74.0 million termination fee and expense reimbursement of up to $10 million.

The Exchange Ratio is fixed and will not be adjusted in the event of any change in the price of IRT’s common stock or in the relative values of IRT and STAR.

At the effective time of the Company Merger, each issued and outstanding share of STAR common stock will be converted into the right to receive 0.905 newly issued shares of IRT common stock (the “Exchange Ratio”), with cash paid in lieu of fractional shares. At the effective time of the Partnership Merger, each issued and outstanding unit of STAR OP will be converted into the right to receive 0.905 common units of IRT OP. The Exchange Ratio is fixed and will not be adjusted for changes in the market price of IRT common stock or in the relative values of IRT and STAR. The price of IRT common stock at the closing of the Mergers may vary from its price on July 26, 2021, the date the Merger Agreement was executed. Changes in IRT’s common stock price prior to consummation of the Mergers will affect the market value of the merger consideration, which may be more or less than the fair value of STAR’s net assets on the closing date. Changes in IRT’s common stock price may result from a variety of factors (many of which are beyond the control of IRT), including the following factors:

• changes in IRT’s business, operations, assets, liabilities or prospects;

• changes in market assessments of the business, operations, financial position and prospects of IRT and STAR;

• market assessments of the likelihood that the Mergers will be consummated;

• interest rates, general market and economic conditions and other factors generally affecting the price of IRT common stock;

• federal, state and local legislation, governmental regulation and legal developments in the businesses in which IRT operates; and

• other factors beyond the control of IRT or STAR, including those described under this heading “Risk Factors.”

The pendency of the Mergers could adversely affect the business and operations of IRT and STAR.

In connection with the pending Mergers, current and prospective employees of IRT and STAR may experience uncertainty about their future roles with IRT following the Mergers, which may materially adversely affect the ability of each of IRT and STAR to attract and retain key personnel during the pendency of the Mergers. In addition, due to operating covenants in the Merger Agreement, each of IRT and STAR may be unable (without the other party’s prior written consent), during the pendency of the Mergers, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions, even if such actions would prove beneficial. Similarly some current or prospective operators or vendors of each of IRT and STAR may delay or defer decisions, which could adversely affect the revenues, earnings, funds from operations, cash flows and expenses of IRT and STAR, regardless of whether the Mergers are consummated.

The Mergers and related transactions are subject to certain closing conditions, including approval by stockholders of both IRT and STAR.

In order for the Mergers to be consummated, STAR common stockholders must approve the Company Merger, which requires the affirmative vote of the holders of at least a majority of the outstanding shares of STAR common stock entitled to vote on such proposal. In addition, IRT common stockholders must approve the issuance of IRT common stock in the Mergers by the affirmative vote of the holders of at least a majority of the votes cast on such proposal. This approval by IRT stockholders is required under applicable New York Stock Exchange (“NYSE”) rules.

IRT stockholders will be significantly diluted by the Mergers.

The Mergers will significantly dilute the ownership position of IRT stockholders. Upon consummation of the Mergers, based on the shares of IRT Common Stock and STAR Common Stock outstanding as of September 27, 2021, and assuming issuance by IRT of 16,100,000 shares of IRT Common Stock in full physical settlement of the Forward Sale Agreements prior to consummation of the Mergers, we estimate that legacy IRT stockholders will own approximately 53% of the issued and outstanding shares of IRT common stock (on a fully diluted basis), and legacy STAR stockholders will own approximately 47% of the issued and outstanding shares of IRT common stock (on a fully diluted basis). IRT may also issue additional shares of common stock or preferred stock in the future, which would create further dilution. Consequently, IRT stockholders, as a general matter, will have less influence over the

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management and policies of IRT after the effective time of the Mergers than they currently exercise over the management and policies of IRT.

The Merger Agreement contains provisions that could discourage a potential competing acquiror of IRT or could result in any competing proposal being at a lower price than it might otherwise be.

The Merger Agreement contains provisions that, subject to limited exceptions, restrict the ability of each of IRT and STAR to initiate, solicit, knowingly encourage or facilitate competing third-party proposals to effect, among other things, a merger, reorganization, share sale, share exchange, asset sale, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving any purchase or sale of 20% or more of the consolidated assets of IRT or STAR. In addition, either IRT or STAR generally has an opportunity to offer to modify the terms of the Merger Agreement in response to any competing “acquisition proposal” that may be made to the other party before the board of directors of such other party may withdraw or modify its recommendation in response to such competing acquisition proposal or may terminate the Merger Agreement to enter into such a competing acquisition proposal. In some circumstances, on termination of the Merger Agreement, one of the parties may be required to pay a substantial termination fee ($74.0 million if the fee is payable by IRT to the STAR parties and $74.0 million if the fee is payable by STAR to the IRT parties) and expense reimbursement of up to $10 million.

These provisions could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of IRT from considering or proposing such an acquisition, even if it were prepared to pay consideration with a higher value than the value expected to be received by IRT through the Mergers, or might result in a potential competing acquiror proposing to pay a lower price for IRT than it might otherwise have proposed to pay because of the added expense of the termination fee and expense reimbursement that may become payable in certain circumstances under the Merger Agreement.

The Mergers will result in changes to the board of directors and management that may affect the strategy and operations of the combined company.

Upon consummation of the Mergers, Scott F. Schaeffer, currently our Chairman of the Board and Chief Executive Officer, will continue in these positions for the combined company; James J. Sebra, currently our Chief Financial Officer, will continue in this position for the combined company; Farrell M. Ender, currently our President, will continue in this position for the combined company; Jessica K. Norman, currently our Executive Vice President and General Counsel, will serve as Chief Legal Officer of the combined company; and Ella S. Neyland, currently STAR’s President, Chief Financial Officer and Treasurer, will serve as Chief Operating Officer of the combined company. In addition, upon consummation of the Mergers, the board of directors of the combined company will be comprised of the following five incumbent directors of our board of directors and the following five incumbent directors of STAR’s board of directors: Scott F. Schaeffer, Richard D. Gebert, Melinda H. McClure, DeForest Blake Soaries Jr. and Lisa Washington; and Stephen R. Bowie, Ned W. Brines, Ana Marie del Rio, Ella S. Neyland and Thomas H. Purcell, respectively. This new composition of the board of directors and executive management team may affect the combined company’s business strategy and operating decisions following the closing of the Mergers. In addition, there can be no assurances that the new board of directors and executive management team will function effectively as a team and that there will not be any adverse effects on the combined company’s business as a result.

An adverse outcome in any litigation or other legal proceedings relating to the Merger Agreement, or the transactions contemplated thereby, could have a material adverse impact on the businesses of IRT and STAR and their ability to consummate the transactions contemplated by the Merger Agreement.

Transactions similar to the Mergers are frequently the subject of litigation or other legal proceedings, including actions alleging that either parties’ board of directors breached their respective duties to their stockholders or other equity holders by entering into a merger agreement, by failing to obtain a greater value in the transaction for their stockholders or other equity holders or otherwise or any other claims (contractual or otherwise) arising out of a merger or the transactions related thereto. If litigation or other legal proceedings are brought against IRT, STAR and/or their respective boards of directors or subsidiaries in connection with the Merger Agreement, or the transactions contemplated thereby, the respective parties to the proceeding intend to defend against such actions but they may not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense, even if successful, could have a material adverse effect on IRT’s or STAR’s ability to consummate the Mergers or their respective business, results of operation or financial position, including through the possible diversion of either company’s resources or distraction of key personnel.

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Risks Relating to the Combined Company Following the Mergers

The combined company expects to incur substantial expenses related to the Mergers and the transactions contemplated by the Merger Agreement.

The combined company expects to incur substantial expenses in consummating the Mergers and integrating the business, operations, networks, systems, technologies, policies and procedures of IRT and STAR. There are a large number of systems that must be integrated or separated in connection with the Mergers, and the other transactions contemplated by the Merger Agreement, including leasing, billing, management information, purchasing, accounting and finance, sales, payroll and benefits, fixed asset, lease administration and regulatory compliance. While IRT and STAR have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. The expenses in connection with the Mergers and the transactions contemplated by the Merger Agreement are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.

Following the Mergers, the combined company may be unable to integrate the business of STAR successfully or realize the anticipated synergies and related benefits of the Mergers and the transactions contemplated by the Merger Agreement or do so within the anticipated time frame.

The Mergers involve the combination of IRT and STAR, two companies which currently operate as independent companies. In addition STAR recently completed a series of transactions to provide for the internalization of its previously externalized management functions. The combined company will be required to devote significant management attention and resources to integrating their business practices and operations. Potential difficulties that IRT and STAR may encounter in the integration process include the following:

• the inability to successfully combine the businesses of IRT and STAR, particularly in light of STAR’s recent internalization transactions, in a manner that permits the combined company to achieve the cost savings anticipated to result from the Mergers, which would result in some anticipated benefits of the Mergers not being realized in the time frame currently anticipated or at all;

• loss of revenue as a result of certain residents of either of IRT or STAR deciding not to do business with the combined company;

• the complexities associated with managing the combined company out of multiple locations and integrating personnel from the two companies;

• the additional complexities of combining two companies with different histories, regulatory restrictions, markets and customer bases;

• the failure to retain key employees of either of IRT or STAR;

• potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Mergers and the transactions contemplated by the Merger Agreement; and

• performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by consummating the Mergers and integrating IRT’s and STAR’s operations into the combined company.

For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the combined company’s management, the disruption of the combined company’s ongoing business or inconsistencies in the combined company’s services, standards, controls, procedures and policies, any of which could adversely affect the ability of the combined company to maintain relationships with residents, customers, vendors, joint venture partners and employees or to achieve the anticipated benefits of the Mergers, or could otherwise adversely affect the business and financial results of the combined company.

The combined company’s anticipated level of indebtedness will increase substantially upon consummation of the Mergers and may increase the related risks IRT now faces.

Upon consummation of the Mergers, the combined company intends to assume and/or refinance certain indebtedness of STAR and STAR OP and, as a result, IRT’s consolidated indebtedness will increase substantially and it will be subject to increased risks associated with debt financing, including an increased risk that IRT’s cash flows could be insufficient to meet required payments on its indebtedness or to continue to pay dividends on its common stock. On September 30, 2021, IRT had consolidated indebtedness of

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approximately $1.02 billion. On September 30, 2021, STAR had consolidated indebtedness of approximately $2.14 billion. Taking into account IRT’s consolidated indebtedness as of September 30, 2021, and the assumption, in the Mergers, of STAR’s consolidated indebtedness at fair value as of September 30, 2021, the pro forma total consolidated indebtedness of the combined company, as of September 30, 2021, would have been approximately $3.16 billion if the Mergers had been consummated on September 30, 2021.

The combined company’s increased indebtedness could have important consequences to holders of its common stock, including:

• increasing the combined company’s vulnerability to general adverse economic and industry conditions;

• limiting the combined company’s ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;

• requiring the combined company to use a substantial portion of its cash flow from operations for the payment of principal and interest on its indebtedness, thereby reducing its ability to use cash flow to fund working capital, acquisitions, capital expenditures and general corporate requirements;

• limiting the combined company’s flexibility in planning for, or reacting to, changes in its business and its industry and economic conditions; and

• putting the combined company at a disadvantage compared to its competitors with less indebtedness.

Additionally, if the combined company defaults under a debt instrument, it will automatically be in default under any other debt instrument that has cross-default provisions and the holders of all such indebtedness may be entitled to demand its immediate repayment. If the combined company defaults under a secured debt instrument, it may lose any property securing that indebtedness.

The combined company may need to incur additional indebtedness in the future.

In connection with executing its business strategy following the Mergers, the combined company expects to evaluate the possibility of acquiring additional properties and making strategic investments, and it may elect to finance these endeavors by incurring additional indebtedness. The amount of such indebtedness could have material adverse consequences for the combined company following the Mergers, including hindering its ability to adjust to changing market, industry or economic conditions; limiting its ability to access the capital markets to refinance maturing debt or to fund acquisitions; limiting the amount of free cash flow available for future operations, acquisitions, dividends, stock repurchases or other uses; making the combined company more vulnerable to economic or industry downturns, including interest rate increases; and placing the combined company at a competitive disadvantage compared to less leveraged competitors.

The combined company will depend on key personnel for its future success, and the loss of key personnel or inability to attract and retain personnel could harm the combined company’s business.

Five members of the current IRT board of directors and all of IRT’s executive officers will continue as members of the board of directors and executive management of the combined company. The future success of the combined company depends in large part on its ability to hire and retain a sufficient number of qualified personnel. The future success of the combined company also depends upon the service of IRT’s executive officers, who each have extensive market knowledge and relationships and will exercise substantial influence over the combined company’s operational, financing, acquisition and disposition activity. Among the reasons that they are important to the combined company’s success is that each has a national or regional industry reputation that is expected to attract business and investment opportunities and assist the combined company in negotiations with lenders, existing and potential residents and industry personnel.

Key employees of IRT or STAR may depart either before or after the Mergers because of issues relating to the uncertainty and difficulty of integration or separation or a desire not to remain with the combined company following the Mergers. Accordingly, no assurance can be given that the combined company, following the Mergers and the transactions contemplated by the Merger Agreement, will be able to retain key employees to the same extent as in the past.

The future results of the combined company will suffer if the combined company does not effectively manage its operations following the Mergers and the transactions contemplated by the Merger Agreement.

Following the Mergers, the combined company may continue to expand its operations through additional acquisitions, development opportunities and other strategic transactions, some of which involve complex challenges. The future success of the combined company will depend, in part, upon the ability of the combined company to manage its expansion opportunities, which poses substantial challenges for the combined company to integrate new operations into its existing business in an efficient and timely manner, to successfully monitor its operations, costs, regulatory compliance and service quality and to maintain other necessary internal controls. IRT cannot assure you that following the Mergers, the combined company’s expansion or acquisition opportunities

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will be successful, or that the combined company will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.

The trading price of shares of the combined company’s common stock following the Mergers may be affected by factors different from those affecting the price of shares of IRT common stock before the Mergers.

If the Mergers are consummated, then, based on the shares of IRT Common Stock and STAR Common Stock outstanding as of September 27, 2021, and assuming issuance by IRT of 16,100,000 shares of IRT Common Stock in full physical settlement of the Forward Sale Agreements prior to consummation of the Mergers, we estimate that legacy IRT stockholders will own approximately 53% of the issued and outstanding shares of IRT common stock (on a fully diluted basis), and legacy STAR stockholders will own approximately 47% of the issued and outstanding shares of IRT common stock (on a fully diluted basis). The results of operations of the combined company, as well as the trading price of IRT common stock, after the Mergers may be affected by factors different from those currently affecting the trading prices of IRT common stock. These different factors include:

• a greater number of shares of IRT common stock outstanding, as compared to the number of shares of IRT common stock currently outstanding;

• different stockholders in the combined company;

• the combined company’s increased level of indebtedness; and

• the combined company owning different assets and maintaining different capitalizations.

Accordingly, the historical trading prices of IRT common stock and the historical financial results of IRT and STAR may not be indicative of these matters for the combined company after the Mergers.

Holders of certain outstanding indebtedness of STAR may exercise contractual rights under the respective debt agreements in connection with the Mergers.

STAR is a party to debt agreements that give the lenders under such agreements certain rights following a merger or change of control, including the right to demand immediate repayment upon the merger or change of control absent a waiver or consent by the applicable lenders.  Loan agreements covering approximately $2.13 billion of STAR indebtedness will require lender waivers or consents for consummation of the Mergers. There is no assurance that any or all of the lenders will provide such waivers or consents and if they do not, then the aggregate amount of indebtedness that would become due and payable upon consummation of the Mergers would be substantial and could result in a material adverse effect on the combined company.

Counterparties to certain agreements with IRT and/or STAR may exercise contractual rights under such agreements in connection with the Mergers.

Each of IRT and STAR is party to certain agreements that may give the counterparty certain rights following a change of control or similar event, including in some cases the right to terminate the agreement. Under some such agreements, the Mergers may constitute a change of control of IRT or STAR, as applicable, or cause certain other triggering events and therefore the counterparty may exercise certain rights under the agreement upon the closing of the Mergers. Any such counterparty may request modifications of its agreement as a condition to granting a waiver or consent under its agreement or it may terminate or seek to terminate its agreement with IRT or STAR, as applicable, as a result of such change of control (if permitted to do so by the applicable agreement). There is no assurance that such counterparties will not exercise their rights under the agreements, including termination rights where available.

Risks Relating to the Status of IRT and STAR as REITs

The combined company may incur adverse tax consequences if IRT or STAR has failed or fails to qualify as a REIT for U.S. federal income tax purposes.

Each of IRT and STAR has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code and intends to continue to do so through the time of the Mergers. The combined company intends to continue operating in such a manner following the Mergers. Neither IRT nor STAR has requested or plans to request a ruling from the IRS that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of IRT or STAR may affect each company’s ability to qualify as a REIT. In order to qualify as a REIT, each of IRT and STAR must satisfy a number of requirements, including requirements regarding the ownership of its stock and the composition of its gross income and assets. Also, a REIT must make distributions to stockholders aggregating annually at least 90% of its net taxable income, excluding any net capital gains.

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The closing of the Mergers is conditioned on receipt by IRT of an opinion from Morrison & Foerster LLP to the effect that, for all taxable years commencing with STAR’s taxable year ended December 31, 2014 and through the Merger Effective Time, STAR has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and receipt by STAR of an opinion from Troutman Pepper Hamilton Sanders LLP to the effect that, for all taxable years commencing with IRT’s taxable year ended December 31, 2011, IRT has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and its proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code for its taxable year that includes the Merger Effective Time and future taxable years. The foregoing REIT opinions, however, will be based on the factual representations provided by IRT and STAR to counsel and limited by the assumptions set forth therein, and are not a guarantee that IRT or STAR, in fact, has qualified, or, in the case of IRT, will continue to qualify as a REIT, nor are such opinions binding on the IRS. Moreover, as noted above, neither IRT nor STAR has requested or plans to request a ruling from the IRS that it qualifies as a REIT.

If the combined company loses its REIT status, or is determined to have lost its REIT status in a prior year, it will face serious tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its stockholders, because:

• it would be subject to U.S. federal income tax on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income);

• it could be subject to increased state and local taxes for such periods;

• unless it is entitled to relief under applicable statutory provisions, neither it nor any “successor” company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified; and

• for five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, it could be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election.

Even if the combined company retains its REIT status, if STAR is determined to have lost its REIT status for a taxable year ending on or before the Mergers, the combined company would be subject to adverse tax consequences. This could substantially reduce the combined company’s cash available for distribution, including cash available to pay dividends to its stockholders, because, assuming that the combined company otherwise maintains its REIT qualification:

• the combined company generally would be subject to corporate level tax with respect to the built-in gain on each asset of STAR existing at the time of the Mergers if the combined company were to dispose of the STAR asset during the five-year period following the Mergers;

• the combined company would succeed to any earnings and profits accumulated by STAR for taxable periods that it did not qualify as a REIT, and the combined company would have to pay a special dividend before the end of the taxable year in which the Mergers close and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits (or if the combined company does not timely distribute those earnings and profits, the combined company could fail to qualify as a REIT); and

• if STAR incurred any unpaid tax liabilities prior to the Mergers, those tax liabilities would be transferred to the combined company as a result of the Mergers.

If there is an adjustment to STAR’s taxable income or dividends paid deductions for taxable years ending on or prior to the Mergers, the combined company could elect to use the deficiency dividend procedure in order to maintain STAR’s REIT status for such taxable years. That deficiency dividend procedure could require the combined company to make significant distributions to its stockholders and to pay significant interest to the IRS.

As a result of all these factors, IRT’s or STAR’s failure to qualify as a REIT could impair the combined company’s ability to expand its business and raise capital, and would materially adversely affect the market value of its common stock. In addition, for years in which the combined company does not qualify as a REIT, it would not otherwise be required to make distributions to stockholders.

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Risks Relating to an Investment in IRT Common Stock

The market price of IRT common stock may decline as a result of the Mergers and the transactions contemplated by the Merger Agreement.

The market price of IRT common stock may decline as a result of the Mergers and the transactions contemplated by the Merger Agreement if, among other things, the combined company does not achieve the perceived benefits of the Mergers and the transactions contemplated by the Merger Agreement or the effect of the Mergers and the transactions contemplated by the Merger Agreement on the combined company’s results of operations or financial condition is not consistent with the expectations of financial or industry analysts.

In addition, upon consummation of the Mergers and the transactions contemplated by the Merger Agreement, IRT stockholders will own interests in the combined company, which will operate an expanded business with a different mix of properties, risks and liabilities. Stockholders of IRT may not wish to continue to invest in the combined company, or may wish to dispose of some or all of their shares of IRT common stock. If, following the effective time of the Mergers or while the Mergers are pending, large amounts of IRT common stock are sold, the market price of IRT common stock could decline, perhaps substantially.

Following the Mergers and the transactions contemplated by the Merger Agreement, the combined company may not continue to pay dividends at the rate currently paid by IRT.

Following consummation of the Mergers, the combined company may not pay dividends at the same level at which IRT current pays dividends, or with the same frequency, including because of factors such as the following:

• the combined company may not have enough cash to pay such dividends due to changes in the combined company’s cash requirements, capital spending plans, cash flow or financial position;

• decisions on whether, when and in what amounts to pay any future dividends will remain at all times entirely at the discretion of the combined company board of directors, which reserves the right to change the combined company’s dividend practices at any time and for any reason; and

• the amount of dividends that the combined company’s subsidiaries may distribute to the combined company may be subject to restrictions imposed by state law and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.

Stockholders of the combined company will have no contractual or other legal right to dividends that have not been declared by the combined company board of directors.

Other Risks

The unaudited pro forma condensed consolidated financial statements filed with the SEC does not purport to be indicative of the combined company’s results after the Mergers and the transactions contemplated by the Merger Agreement, and accordingly, you will have limited financial information on which to evaluate the future performance of the combined company.

The unaudited pro forma condensed consolidated financial statements filed with the SEC is presented for informational purposes only and does not purport to be indicative of the financial position or results of operations that actually would have occurred had the Mergers and the transactions contemplated by the Merger Agreement been consummated as of the dates indicated, nor do they purport to be indicative of the future operating results or financial position of the combined company after the Mergers and the transactions contemplated by the Merger Agreement. The unaudited pro forma condensed consolidated financial statements reflect adjustments, based upon preliminary estimates, to allocate the purchase price to STAR’s assets and liabilities.

In addition, the unaudited pro forma condensed consolidated financial statements do not reflect other future events that may occur after consummation of the Mergers, including the costs related to the planned integration of IRT and STAR and any future nonrecurring charges resulting from the Mergers and the transactions contemplated by the Merger Agreement, and do not consider potential impacts of current market conditions on revenues or expense efficiencies. The unaudited pro forma condensed consolidated financial statements filed with the SEC are based in part on certain estimates and assumptions (including the estimated purchase price allocation described above) regarding the Mergers and the transactions contemplated by the Merger Agreement that IRT believes are reasonable under the circumstances. IRT cannot assure you that the estimates and assumptions will prove to be accurate.

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Following the Mergers, the market price and trading volume of IRT common stock may be volatile.

The United States stock markets, including the NYSE, on which the IRT common stock is and, after the Mergers, will continue to be listed under the symbol “IRT,” have experienced significant price and volume fluctuations. As a result, the market price of shares of IRT common stock is likely to be similarly volatile, and investors in shares of IRT common stock may experience a decrease, which could be substantial, in the value of their shares, including decreases unrelated to IRT’s operating performance or prospects. IRT cannot assure you that the market price of shares of IRT’s common stock will not fluctuate or decline significantly in the future.

In addition to the risks listed elsewhere in these “Risk Factors,” a number of factors could negatively affect IRT’s common stock price or result in fluctuations in the price or trading volume of IRT’s common stock, including:

• the annual yield from distributions on IRT common stock as compared to yields on other financial instruments;

• equity issuances by IRT (including issuances of IRT common stock in the Mergers), or future sales of shares of IRT common stock by its current or future stockholders, or the perception that such issuances or sales may occur;

• increases in market interest rates or a decrease in IRT’s distributions to stockholders that lead prospective investors in IRT common stock to seek a higher yield;

• changes in market valuations of similar companies;

• fluctuations in stock market prices and volumes;

• additions or departures of key management personnel;

• IRT’s operating performance and the performance of other similar companies;

• actual or anticipated differences in IRT’s quarterly operating results;

• changes in expectations of future financial performance or changes in estimates of securities analysts;

• publication of research reports about IRT or its industry by securities analysts;

• failure to qualify as a REIT for federal income tax purposes;

• adverse market reaction to any indebtedness IRT incurs in the future, including indebtedness to be assumed or incurred in connection with the Mergers;

• strategic decisions by IRT or its competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;

• the passage of legislation or other regulatory developments that adversely affect IRT or its industry or any failure by IRT to comply with regulatory requirements;

• the expiration or loss of local tax abatements, tax credit programs, or other governmental incentives;

• the imposition of a penalty tax as a result of certain property transfers that may generate prohibited transaction income;

• the inability of IRT to sell properties if and when it would be appropriate to do so;

• speculation in the press or investment community;

• changes in IRT’s results of operations, financial condition or prospects;

• failure to satisfy the listing requirements of the NYSE;

• failure to comply with the requirements of the Sarbanes-Oxley Act;

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• actions by institutional stockholders of IRT;

• changes in accounting principles;

• changes in environmental conditions or the potential impact of climate change;

• terrorist attacks or other acts of violence or war in areas in which IRT’s properties are located or markets on which IRT’s securities are traded; and

• general economic and/or market conditions, including factors unrelated to IRT’s performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert IRT’s management’s attention and resources, which could have a material adverse effect on IRT’s cash flows, its ability to execute its business strategy and IRT’s ability to make distributions to its stockholders.

Sales of substantial amounts of IRT common stock in the public markets, or the perception that they might occur, could reduce the price of the IRT common stock.

Upon the completion of the Mergers, a total of approximately 204.9 million shares of IRT common stock will be outstanding. Prior to the Mergers, the STAR common stock was not listed on any national securities exchange and the ability of STAR stockholders to liquidate their investments was limited. As a result, there may be increased demand to sell shares of IRT common stock upon the closing of the Mergers, at which time shares of STAR common stock will be converted into shares of the IRT common stock, which will be listed on the NYSE and freely tradable. A large volume of sales of shares (or short sales) of the IRT common stock could decrease the prevailing market price of the IRT common stock and could impair IRT’s ability to raise additional capital through the sale of equity securities in the future. Even if a substantial number of sales of IRT common stock are not effected, the mere perception of the possibility of these sales could depress the market price of the IRT common stock and have a negative effect on IRT’s ability to raise capital in the future.

IRT faces other risks.

The risks listed above are not exhaustive, and you should be aware that, prior to and following the Mergers and the transactions contemplated by the Merger Agreement, IRT will face various other risks, including those discussed in reports filed by IRT with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended September 30, 2021, no IROP unitholders exchanged any units for shares of our common stock or cash. As of September 30, 2021, 552,360 IROP units held by unaffiliated third parties remain outstanding.

During the three months ended September 30, 2021, we withheld shares of common stock to satisfy employee tax withholding obligations payable upon the vesting of restricted common stock awards, as follow:

Period	Total Number of Shares Purchased		Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
07/01/2021 to 07/31/2021		726	$	18.16		—		—
08/01/2021 to 08/31/2021		—		—		—		—
09/01/2021 to 09/30/2021		—		—		—		—
Total		726	$	18.16		—		—

Item 3. Defaults Upon Senior Securities.

None.

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Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

2.1	Agreement and Plan of Merger, dated as of July 26, 2021, by and among Independence Realty Trust, Inc., Independence Realty Operating Partnership, LP, IRSTAR Sub, LLC, LLC, Steadfast Apartment REIT, Inc. and Steadfast Apartment REIT Operating Partnership, L.P., incorporated by reference to Exhibit 2.1 to IRT’s Current Report on Form 8-K filed on July 26, 2021.*
3.1	Articles of Amendment, incorporated by reference to Exhibit 3.1 to IRT’s Current Report on Form 8-K filed on July 30, 2021.
3.2	Independence Realty Trust, Inc. Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 to IRT’s Current Report on Form 8-K filed on July 26, 2021.
10.1	Form of Executive Acknowledgement, incorporated by reference to Exhibit 10.1 to IRT’s Current Report on Form 8-K filed on July 26, 2021.**
10.2	Confirmation of Issuer Share Forward Sale Transaction, dated July 27, 2021, by and among Independent Realty Trust, Inc., Bank of Montreal and BMO Capital Markets Corp., incorporated by reference to Exhibit 1.2 to IRT’s Current Report on Form 8-K filed on July 30, 2021.
10.3	Confirmation of Issuer Share Forward Sale Transaction, dated July 29, 2021, by and among Independent Realty Trust, Inc., Bank of Montreal and BMO Capital Markets Corp., incorporated by reference to Exhibit 1.3 to IRT’s Current Report on Form 8-K filed on July 30, 2021.
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101	iXBRL (Inline eXtensible Business Reporting Language). The following materials, formatted in iXBRL: (i) Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020, (iii) Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2021 and 2020, (iv) Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2021 and 2020, (v) Consolidated Statements of Cash Flows for the nine months September 30, 2021 and 2020 and (vi) notes to the consolidated financial statements as of September 30, 2021.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. IRT agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request by the SEC.

**Management agreement or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Independence Realty Trust, Inc.
Date: October 29, 2021	By:	/s/ Scott f. Schaeffer
		Scott F. Schaeffer
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)
Date: October 29, 2021	By:	/s/ James J. Sebra
		James J. Sebra
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)
Date: October 29, 2021	By:	/s/ Jason R. Delozier
		Jason R. Delozier
		Chief Accounting Officer
		(Principal Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Scott F. Schaeffer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Independence Realty Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2021

By:	/s/ Scott f. Schaeffer
	Scott F. Schaeffer
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, James J. Sebra, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Independence Realty Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2021

By:	/s/ James J. Sebra
	James J. Sebra
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Independence Realty Trust, Inc. (the “Company”) for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chairman of the Board, Chief Executive Officer and President of the Company, certifies, to his knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 29, 2021

By:	/s/ Scott f. Schaeffer
	Scott F. Schaeffer
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Independence Realty Trust, Inc. (the “Company”) for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Financial Officer and Treasurer of the Company, certifies, to his knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: October 29, 2021

By:	/s/ James J. Sebra
	James J. Sebra
	Chief Financial Officer and Treasurer
	(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Oct. 25, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Trading Symbol	IRT
Entity Registrant Name	INDEPENDENCE REALTY TRUST, INC.
Entity Central Index Key	0001466085
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		105,111,943
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-36041
Entity Tax Identification Number	26-4567130
Entity Address, Address Line One	1835 Market Street
Entity Address, Address Line Two	Suite 2601
Entity Address, City or Town	Philadelphia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19103
City Area Code	267
Local Phone Number	270-4800
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common stock
Security Exchange Name	NYSE
Entity Incorporation, State or Country Code	MD
Document Quarterly Report	true
Document Transition Report	false

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Investments in real estate:
Investments in real estate, at cost	$ 1,904,760	$ 1,916,770
Accumulated depreciation	(223,244)	(208,618)
Investments in real estate, net	1,681,516	1,708,152
Real estate held for sale	120,409
Cash and cash equivalents	8,720	8,751
Restricted cash	6,138	4,864
Investments in unconsolidated real estate entities	13,561
Other assets	15,053	12,338
Derivative assets	1,168
Intangible assets, net of accumulated amortization of $411 and $0, respectively	346	792
Total Assets	1,846,911	1,734,897
LIABILITIES AND EQUITY:
Indebtedness, net of unamortized deferred financing costs of $4,237 and $4,208, respectively	996,270	945,686
Indebtedness associated with real estate held for sale, net of unamortized deferred financing costs of $45 and $0, respectively	22,459
Accounts payable and accrued expenses	39,593	25,416
Accrued interest payable	1,708	1,976
Dividends payable	12,648	12,257
Derivative liabilities	17,492	29,842
Other liabilities	6,756	6,949
Total Liabilities	1,096,926	1,022,126
Stockholders’ equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively
Common stock, $0.01 par value; 500,000,000 shares authorized, 105,106,714 and 101,803,762 shares issued and outstanding, including 253,698 and 339,468 unvested restricted common share awards, respectively	1,051	1,018
Additional paid-in capital	965,018	919,615
Accumulated other comprehensive income (loss)	(19,507)	(33,822)
Retained earnings (accumulated deficit)	(200,429)	(178,751)
Total stockholders’ equity	746,133	708,060
Noncontrolling interests	3,852	4,711
Total Equity	749,985	712,771
Total Liabilities and Equity	$ 1,846,911	$ 1,734,897

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Intangible assets, accumulated amortization	$ 411	$ 0
Indebtedness, unamortized deferred financing costs	4,237	4,208
Indebtedness associated with real estate held for sale, unamortized deferred financing costs	$ 45	$ 0
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	105,106,714	101,803,762
Common stock, shares outstanding	105,106,714	101,803,762
Unvested restricted common share awards	253,698	339,468

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
REVENUE:
Rental and other property revenue	$ 60,592	$ 54,001	$ 172,689	$ 157,244
Other revenue	188	199	647	574
Total revenue	60,780	54,200	173,336	157,818
EXPENSES:
Property operating expenses	$ 23,164	$ 22,129	$ 66,300	$ 62,840
Type of Cost, Good or Service [Extensible List]	us-gaap:AssetManagement1Member	us-gaap:AssetManagement1Member	us-gaap:AssetManagement1Member	us-gaap:AssetManagement1Member
Property management expenses	$ 2,199	$ 2,078	$ 6,318	$ 6,311
General and administrative expenses	3,985	2,912	14,168	11,862
Depreciation and amortization expense	17,384	15,232	50,699	45,291
Abandoned deal costs				130
Casualty losses	0	0	359	411
Total expenses	46,732	42,351	137,844	126,845
Interest expense	(8,700)	(8,917)	(25,644)	(27,616)
Gain on sale (loss on impairment) of real estate assets, net	11,492	(1,840)	11,492	(1,840)
Merger and integration costs	(5,276)		(5,276)
Net income:	11,564	1,092	16,064	1,517
Income allocated to noncontrolling interest	(62)	(2)	(90)	(10)
Net income allocable to common shares	$ 11,502	$ 1,090	$ 15,974	$ 1,507
Earnings per share:
Basic	$ 0.11	$ 0.01	$ 0.16	$ 0.02
Diluted	$ 0.11	$ 0.01	$ 0.15	$ 0.02
Weighted-average shares:
Basic	104,918,674	94,456,987	102,882,723	93,261,757
Diluted	107,668,675	95,222,623	104,062,661	94,099,091

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 11,564	$ 1,092	$ 16,064	$ 1,517
Other comprehensive income (loss):
Change in fair value of interest rate hedges	4,759	3,225	20,296	(22,170)
Realized (losses) gains on interest rate hedges reclassified to earnings	(2,238)	(1,752)	(5,859)	(3,575)
Total other comprehensive income (loss)	2,521	1,473	14,437	(25,745)
Comprehensive income (loss) before allocation to noncontrolling interests	14,085	2,565	30,501	(24,228)
Allocation to noncontrolling interests	(79)	(64)	(212)	146
Comprehensive income (loss)	$ 14,006	$ 2,501	$ 30,289	$ (24,082)

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Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Shares	Additional Paid In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Deficit)	Total Stockholders' Equity	Noncontrolling Interests
Beginning Balance at Dec. 31, 2019	$ 619,757	$ 911	$ 765,992	$ (12,099)	$ (141,525)	$ 613,279	$ 6,478
Beginning Balance (in Shares) at Dec. 31, 2019		91,070,637
Net income (loss)	(374)				(372)	(372)	(2)
Other comprehensive income (loss)	(23,840)			(23,651)		(23,651)	(189)
Stock compensation expenses	2,644	$ 2	2,642			2,644
Stock compensation expense (in Shares)		183,940
Issuance of common shares, net	49,764	$ 35	49,729			49,764
Issuance of common shares (in Shares)		3,406,000
Repurchase of shares related to equity award tax withholding	(1,490)	$ (1)	(1,489)			(1,490)
Repurchase of shares related to equity award tax withholding (in shares)		(51,128)
Conversion of noncontrolling interest to common shares			627			627	(627)
Conversion of noncontrolling interest to common shares (in Shares)		82,357
Common dividends declared	(17,148)				(17,148)	(17,148)
Distribution to noncontrolling interest declared	(142)						(142)
Ending Balance at Mar. 31, 2020	629,171	$ 947	817,501	(35,750)	(159,045)	623,653	5,518
Ending Balance (in shares) at Mar. 31, 2020		94,691,806
Beginning Balance at Dec. 31, 2019	619,757	$ 911	765,992	(12,099)	(141,525)	613,279	6,478
Beginning Balance (in Shares) at Dec. 31, 2019		91,070,637
Net income (loss)	1,517
Other comprehensive income (loss)	(25,745)
Ending Balance at Sep. 30, 2020	608,346	$ 948	820,105	(37,688)	(179,834)	603,531	4,815
Ending Balance (in shares) at Sep. 30, 2020		94,823,806
Beginning Balance at Mar. 31, 2020	629,171	$ 947	817,501	(35,750)	(159,045)	623,653	5,518
Beginning Balance (in Shares) at Mar. 31, 2020		94,691,806
Net income (loss)	799				789	789	10
Other comprehensive income (loss)	(3,378)			(3,349)		(3,349)	(29)
Stock compensation expenses	1,250		1,250			1,250
Stock compensation expense (in Shares)		49,340
Issuance of common shares, net	(32)		(32)			(32)
Common dividends declared	(11,329)				(11,329)	(11,329)
Distribution to noncontrolling interest declared	(95)						(95)
Ending Balance at Jun. 30, 2020	616,386	$ 947	818,719	(39,099)	(169,585)	610,982	5,404
Ending Balance (in shares) at Jun. 30, 2020		94,741,146
Net income (loss)	1,092				1,090	1,090	2
Other comprehensive income (loss)	1,473			1,411		1,411	62
Stock compensation expenses	920		920			920
Stock compensation expense (in Shares)		(4,488)
Issuance of common shares, net	(102)		(102)			(102)
Conversion of noncontrolling interest to common shares		$ 1	568			569	(569)
Conversion of noncontrolling interest to common shares (in Shares)		87,148
Common dividends declared	(11,339)				(11,339)	(11,339)
Distribution to noncontrolling interest declared	(84)						(84)
Ending Balance at Sep. 30, 2020	608,346	$ 948	820,105	(37,688)	(179,834)	603,531	4,815
Ending Balance (in shares) at Sep. 30, 2020		94,823,806
Beginning Balance at Dec. 31, 2020	$ 712,771	$ 1,018	919,615	(33,822)	(178,751)	708,060	4,711
Beginning Balance (in Shares) at Dec. 31, 2020	101,803,762	101,803,762
Net income (loss)	$ 1,093				1,086	1,086	7
Other comprehensive income (loss)	13,413			13,325		13,325	88
Stock compensation expenses	3,348	$ 2	3,346			3,348
Stock compensation expense (in Shares)		286,647
Issuance of common shares, net	(59)		(59)			(59)
Repurchase of shares related to equity award tax withholding	(2,862)	$ (2)	(2,860)			(2,862)
Repurchase of shares related to equity award tax withholding (in shares)		(56,677)
Common dividends declared	(12,486)				(12,486)	(12,486)
Distribution to noncontrolling interest declared	(80)						(80)
Ending Balance at Mar. 31, 2021	715,138	$ 1,018	920,042	(20,497)	(190,151)	710,412	4,726
Ending Balance (in shares) at Mar. 31, 2021		102,033,732
Beginning Balance at Dec. 31, 2020	$ 712,771	$ 1,018	919,615	(33,822)	(178,751)	708,060	4,711
Beginning Balance (in Shares) at Dec. 31, 2020	101,803,762	101,803,762
Net income (loss)	$ 16,064
Other comprehensive income (loss)	14,437
Ending Balance at Sep. 30, 2021	$ 749,985	$ 1,051	965,018	(19,507)	(200,429)	746,133	3,852
Ending Balance (in shares) at Sep. 30, 2021	105,106,714	105,106,714
Beginning Balance at Mar. 31, 2021	$ 715,138	$ 1,018	920,042	(20,497)	(190,151)	710,412	4,726
Beginning Balance (in Shares) at Mar. 31, 2021		102,033,732
Net income (loss)	3,407				3,386	3,386	21
Other comprehensive income (loss)	(1,497)			(1,514)		(1,514)	17
Stock compensation expenses	1,357	$ 1	1,356			1,357
Stock compensation expense (in Shares)		23,436
Issuance of common shares, net	41,610	$ 30	41,580			41,610
Issuance of common shares (in Shares)		2,932,000
Repurchase of shares related to equity award tax withholding	(80)	$ 1	(81)			(80)
Repurchase of shares related to equity award tax withholding (in shares)		(1,674)
Conversion of noncontrolling interest to common shares		$ 1	857			858	(858)
Conversion of noncontrolling interest to common shares (in Shares)		122,155
Common dividends declared	(12,585)				(12,585)	(12,585)
Distribution to noncontrolling interest declared	(67)						(67)
Ending Balance at Jun. 30, 2021	747,283	$ 1,051	963,754	(22,011)	(199,350)	743,444	3,839
Ending Balance (in shares) at Jun. 30, 2021		105,109,649
Net income (loss)	11,564				11,502	11,502	62
Other comprehensive income (loss)	2,521			2,504		2,504	17
Stock compensation expenses	1,298		1,298			1,298
Stock compensation expense (in Shares)		(2,209)
Issuance of common shares, net	(70)		(70)			(70)
Repurchase of shares related to equity award tax withholding	36		36			36
Repurchase of shares related to equity award tax withholding (in shares)		(726)
Common dividends declared	(12,581)				(12,581)	(12,581)
Distribution to noncontrolling interest declared	(66)						(66)
Ending Balance at Sep. 30, 2021	$ 749,985	$ 1,051	$ 965,018	$ (19,507)	$ (200,429)	$ 746,133	$ 3,852
Ending Balance (in shares) at Sep. 30, 2021	105,106,714	105,106,714

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Condensed Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020
Statement Of Stockholders Equity [Abstract]
Common dividends declared per share	$ 0.12	$ 0.12	$ 0.12	$ 0.12	$ 0.12	$ 0.18
Distribution to noncontrolling interest declared per share	$ 0.12	$ 0.12	$ 0.12	$ 0.12	$ 0.12	$ 0.18

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income	$ 11,564	$ 1,092	$ 16,064	$ 1,517
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation and amortization	17,384	15,232	50,699	45,291
Amortization of deferred financing costs			1,154	1,085
Stock compensation			5,914	4,761
(Gain on sale) loss on impairment of real estate assets, net	(11,492)	1,840	(11,492)	1,840
Casualty losses	0	0	359	411
Amortization related to derivative instruments			920	890
Changes in assets and liabilities:
Other assets			(2,518)	(3,226)
Accounts payable and accrued expenses			12,834	8,289
Accrued interest payable			(268)	(270)
Other liabilities			59	(22)
Cash flow provided by operating activities			73,725	60,566
Cash flows from investing activities:
Acquisition of real estate properties			(139,231)	(51,447)
Investments in unconsolidated real estate entities			(13,561)
Disposition of real estate properties			39,182
Capital expenditures			(31,827)	(26,986)
Cash flow used in investing activities			(145,437)	(78,433)
Cash flows from financing activities:
Proceeds from unsecured credit facility and term loans			387,500	99,501
Unsecured credit facility repayments			(234,800)	(44,000)
Mortgage principal repayments			(79,582)	(37,871)
Payments for deferred financing costs			(1,261)	(50)
Proceeds from issuance of common stock, net			41,481	49,630
Distributions on common stock			(37,249)	(44,808)
Distributions to noncontrolling interests			(228)	(369)
Repurchase of shares related to equity award tax withholding			(2,906)	(1,490)
Cash flow provided by financing activities			72,955	20,543
Net change in cash and cash equivalents, and restricted cash			1,243	2,676
Cash and cash equivalents, and restricted cash, beginning of period			13,615	14,433
Cash and cash equivalents, and restricted cash, end of the period	14,858	17,109	14,858	17,109
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheet
Cash and cash equivalents	8,720	9,891	8,720	9,891
Restricted cash	6,138	7,218	6,138	7,218
Cash and cash equivalents, and restricted cash, end of the period	$ 14,858	$ 17,109	$ 14,858	$ 17,109

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Organization

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Organization

NOTE 1: Organization

Independence Realty Trust, Inc. (“IRT”), is a self-administered and self-managed Maryland real estate investment trust (“REIT”) which was formed on March 26, 2009.  Our primary purposes are to acquire, own, operate, improve and manage multifamily apartment communities in non-gateway markets. As of September 30, 2021, we owned and operated 57 multifamily apartment properties that contain 16,109 units across non-gateway U.S. markets including Atlanta, Dallas, Louisville, Memphis, Raleigh, and Tampa. We own all of our assets and conduct substantially all of our operations through Independence Realty Operating Partnership, LP (“IROP”), of which we are the sole general partner.   

   As used herein, the terms “we,” “our” and “us” refer to Independence Realty Trust, Inc. and, as required by context, IROP and their subsidiaries.

Pending Merger

On July 26, 2021, we, together with IROP, and IRSTAR Sub, LLC, a wholly-owned subsidiary of IRT (“IRT Merger Sub”), entered into an agreement and plan of merger (the “Merger Agreement”) with Steadfast Apartment REIT, Inc. (“STAR”) and its operating partnership, Steadfast Apartment REIT Operating Partnership, L.P. (“STAR OP”).

On the terms, and subject to the conditions of, the Merger Agreement, STAR will merge with and into IRT Merger Sub (the “REIT Merger”), with IRT Merger Sub surviving the REIT Merger as a wholly-owned subsidiary of IRT; and immediately thereafter, STAR OP will merge with and into IROP (the “Partnership Merger” and, together with the REIT Merger, the “Mergers”), with IROP surviving the Partnership Merger.

In the REIT Merger, each outstanding share of STAR common stock, par value $0.01 per share (“STAR common stock”) will be converted automatically into the right to receive 0.905 (the “Exchange Ratio”) of a newly issued share of IRT common stock, par value $0.01 per share (“IRT common stock”). In the Partnership Merger, each outstanding unit of limited partnership of STAR OP (each, a “STAR OP common unit”) will be converted into the right to receive the Exchange Ratio of a newly issued common unit of limited partnership of IROP (each, an “IROP common unit”). Consummation of the Mergers is subject to customary closing conditions, including, among others, receipt of IRT stockholder approval and STAR stockholder approval and we currently expect the Mergers to close in December 2021.

In conjunction with the Mergers, we have incurred approximately $5,276 in merger-related transaction costs during the three and nine months ended September 30, 2021. The merger-related costs incurred to date primarily consist of advisory fees, attorney fees, accountant fees and SEC filing fees. These costs are presented in a separate line item on the face of the condensed consolidated statements of operations.  

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2: Summary of Significant Accounting Policies

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2020 included in our 2020 Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of IROP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.  Pursuant to the Financial Accounting Standards Board (the “FASB”)

Accounting Standards Codification Topic 810, “Consolidation”, IROP is considered a variable interest entity to which we are the primary beneficiary.  As our significant asset is our investment in IROP, substantially all of our assets and liabilities represent the assets and liabilities of IROP.

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with maturities of three months or less when purchased.  Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution.  We mitigate credit risk by placing cash and cash equivalents with major financial institutions.  To date, we have not experienced any losses on cash and cash equivalents.

e. Restricted Cash

Restricted cash includes escrows of our funds held by lenders to fund certain expenditures, such as real estate taxes and insurance, or to be released at our discretion upon the occurrence of certain pre-specified events.  As of September 30, 2021 and December 31, 2020, we had $6,138 and $4,864, respectively, of restricted cash.

f. Investments in Real Estate

Investments in real estate are recorded at cost less accumulated depreciation. Costs that both add value and appreciably extend the useful life of an asset are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

Investments in real estate are classified as held for sale in the period in which certain criteria are met including when management commits to a plan to sell, an active program to locate a buyer has been initiated, the sale is probable, and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan of sale will be made or the plan of sale will be withdrawn.

Allocation of Purchase Price of Acquired Assets

The properties we acquire are generally accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs related to the acquisition, are accumulated and then allocated to the individual assets and liabilities acquired based upon their relative fair value.  Transaction costs and fees incurred related to the financing of an acquisition are capitalized and amortized over the life of the related financing.

We estimate the fair value of acquired tangible assets (consisting of land, building and improvements), identified intangible assets (consisting of in-place leases), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date.

The aggregate value of in-place leases is determined by evaluating various factors, including the terms of the leases that are in place and assumed lease-up periods. The value assigned to in-place lease assets is amortized over the assumed lease up period, typically six months. During the three and nine months ended September 30, 2021, we acquired in-place leases with a value of $0 and $757, respectively, as part of related property acquisitions that are discussed further in Note 3. For the three and nine months ended September 30, 2021, we recorded $368 and $1,203, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2020, we recorded $73 and $631, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2021, we wrote-off fully amortized intangible assets of $0 and $792, respectively. For the three and nine months ended September 30, 2020, we wrote-off fully amortized intangible assets of $211 and $1,171, respectively. As of September 30, 2021, we expect to record additional amortization expense on current in-place intangible assets of $346 for the remainder of 2021.  

Impairment of Long-Lived Assets

Management evaluates the recoverability of our investment in real estate assets, including related identifiable intangible assets, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment”. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that recoverability of the assets is not assured.

Management reviews our long-lived assets on an ongoing basis and evaluates the recoverability of the carrying value when there is an indicator of impairment. An impairment charge is recorded when it is determined that the carrying value of the asset exceeds the fair value. The estimated cash flows used for the impairment analysis and the determination of estimated fair value are based on our plans for the respective assets and our views of market and economic conditions. The estimates consider matters such as current and historical rental rates, occupancies for the respective and/or comparable properties, and recent sales data for comparable properties. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of impairment losses, which, under the applicable accounting guidance, could be substantial.

Depreciation Expense

Depreciation expense for real estate assets is computed using a straight-line method based on a life of 40 years for buildings and improvements and five to ten years for equipment and fixtures.  For the three and nine months ended September 30, 2021, we recorded $17,016 and $49,496 of depreciation expense, respectively. For the three and nine months ended September 30, 2020, we recorded $15,159 and $44,660 of depreciation expense, respectively.

Casualty Loss

Occasionally, we incur losses at our communities from wind storms, floods, fires and similar hazards. Sometimes, a portion of these losses are not fully covered by our insurance policies due to deductibles. In these cases, we estimate the carrying value of the damaged property and record a casualty loss for the difference between the estimated carrying value and the insurance proceeds. During the three and nine months ended September 30, 2021, we incurred $0 and $359 of casualty losses, respectively. We incurred $0 and $411casualty losses during the three and nine months ended September 30, 2020.

g. Investments in unconsolidated real estate entities

We invest in joint ventures in which we exercise significant influence but do not control the major decisions of the joint venture. Therefore, we account for these investments using the equity method of accounting.  Under the equity method of accounting, the investments are carried at cost plus our share of net earnings or losses.  As of September 30, 2021 and December 31, 2020, the carrying value of our investments in joint ventures totaled $13,561 and $0, respectively, and was recorded as a separate line item on the face of our consolidated balance sheet. We recognized no income or losses from equity method investments during the three and nine months ended September 30, 2021 and 2020.

h. Revenue and Expenses

Rental and other property revenue

We apply FASB ASC Topic 842, “Leases” with respect to our accounting for rental income.  We primarily lease apartment units under operating leases generally with terms of one year or less. Rental payments are generally due monthly and rental revenues are recognized on an accrual basis when earned.  We have elected to account for lease (i.e. fixed payments including base rent) and non-lease components (i.e. tenant reimbursements and certain other service fees) as a single combined operating lease component since (1) the timing and pattern of transfer of the lease and non-lease components is the same, (2) the lease component is the predominant element, and (3) the combined single lease component would be classified as an operating lease.

We make ongoing estimates of the collectability of our base rents, tenant reimbursements, and other service fees included within rental and other property revenue.  If collectability is not probable, we adjust rental and other property income for the amount of uncollectible revenue.

Due to the COVID-19 pandemic, some of our residents have experienced difficulty making rent payments and, as a result, our rent receivables have increased compared to historical levels. This caused us to further evaluate collectability and we recorded $121 and $246 provision for bad debts during the three and nine months ended September 30, 2021, respectively, to appropriately reflect management’s estimate for uncollectible accounts. The provision for bad debts was recorded as a reduction to rental and other property income in our consolidated statements of operations. The total adjustment to rental and other property income for the three and nine months ended September 30, 2021 was $655 and $1,678, respectively. The total adjustment to rental and other property income for the three and nine months ended September 30, 2020 was $340 and $1,428, respectively.

To support our residents that were economically impacted and unable to pay their rent in full during 2020, we offered residents deferred rent payment plans whereby the resident could defer between 25% and 75% of their monthly rent for between one and three months. Residents were required to provide evidence of financial hardship and commit to a full 12-month lease term, which provided a longer period over which the deferred rent could be repaid. We accounted for the deferred payment plans as if no change had been made to the original lease agreement and continued to recognize rental income while increasing lease receivables from residents. As of September 30, 2021 and December 31, 2020, deferred rents receivable from residents totaled $0 and $175, respectively.  

For the three and nine months ended September 30, 2021, we recognized revenues of $28 and $69, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers. For the three and nine months ended September 30, 2020, we recognized revenues of $32 and $184, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers.

Advertising Expenses

For the three and nine months ended September 30, 2021, we incurred $624 and $1,804 of advertising expenses, respectively. For the three and nine months ended September 30, 2020, we incurred $667 and $1,827 of advertising expenses, respectively.

i. Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure, as well as to hedge specific anticipated transactions. While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described.  The counterparties to these contractual arrangements are major financial institutions with which we and our affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.

In accordance with FASB ASC Topic 815, “Derivatives and Hedging”, we measure each derivative instrument at fair value and record such amounts in our consolidated balance sheets as either an asset or liability.  For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative are reported in other comprehensive income and changes in the fair value of the ineffective portions of cash flow hedges, if any, are recognized in earnings.  For derivatives not designated as hedges (or designated as fair value hedges), the changes in fair value of the derivative instrument are recognized in earnings.  Any derivatives that we designate in hedge relationships are done so at inception.  At inception, we determine whether or not the derivative is highly effective in offsetting changes in the designated interest rate risk associated with the identified indebtedness using regression analysis.  At each reporting period, we update our regression analysis and use the hypothetical derivative method to measure any ineffectiveness.

j. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

• Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

• Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. Given that cash and cash equivalents and restricted cash are short term in nature with limited fair value volatility, the carrying amount is deemed to be a reasonable approximation of fair value and the fair value input is classified as a Level 1 fair value measurement. The fair value input for the derivatives is classified as a Level 2 fair value measurement within the fair value hierarchy. The fair value inputs for our unsecured credit facility and term loans are classified as Level 2 fair value measurements within the fair value hierarchy. The fair value of mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy.  We determine appropriate credit spreads based on the type of debt and its maturity. There were no transfers between levels in the fair value hierarchy for the nine months ended September 30, 2021. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:

	As of September 30, 2021				As of December 31, 2020
Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Cash and cash equivalents	$	8,720	$	8,720	$	8,751	$	8,751
Restricted cash		6,138		6,138		4,864		4,864
Derivative assets		1,168		1,168		—		—
Liabilities
Debt:
Unsecured credit facility		136,324		137,503		183,110		184,802
Unsecured term loans		497,844		500,000		298,759		300,000
Mortgages (1)		384,561		396,504		463,817		479,929
Derivative liabilities		17,492		17,492		29,842		29,842

(1) Includes indebtedness associated with real estate held for sale.

k. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

l. Office Leases

In accordance with FASB ASC Topic 842, “Leases”, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet at the lease commencement date for all leases, except those leases with terms of less than a year.  We lease corporate office space under leases with terms of up to 10 years and that may include extension options, but that do not include any residual value guarantees or restrictive covenants. As of September 30, 2021, we have $2,360 of operating lease right-of-use assets and $2,701 of operating lease liabilities related to our corporate office leases. The operating lease right-of-use assets are presented within other assets and the operating lease liabilities are presented within other liabilities in our consolidated balance sheet. We recorded $172 and $510 of total operating lease expense during the three and nine months ended September 30, 2021, which is recorded within property management expense and general and administrative expenses in our condensed consolidated statements of operations.    

m. Income Taxes

We have elected to be taxed as a REIT.  Accordingly, we recorded no income tax expense for the three and nine months ended September 30, 2021 and 2020.

To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders.  As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions.  Such an event could materially adversely affect our net income and net cash available for distribution to stockholders; however, we believe that we are organized and operate in such a manner as to qualify and maintain treatment as a REIT and intend to operate in such a manner so that we will remain qualified as a REIT for federal income tax purposes.  

n. Recent Accounting Pronouncements

Below is a brief description of recent accounting pronouncements that could have a material effect on our financial statements.  

Adopted Within these Financial Statements

In March 2020, the FASB issued an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.  We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. 

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Investments in Real Estate

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Investments in Real Estate

NOTE 3: Investments in Real Estate

As of September 30, 2021, our investments in real estate consisted of 57 apartment properties that contain 16,109 units.  The following table summarizes our investments in real estate:   

	As of September 30, 2021			As of December 31, 2020			Depreciable Lives (In years)
Land	$	238,221		$	251,365			—
Building		1,525,395			1,527,535			40
Furniture, fixtures and equipment		141,144			137,870		5-10
Total investment in real estate	$	1,904,760		$	1,916,770
Accumulated depreciation		(223,244	)		(208,618	)
Investments in real estate, net	$	1,681,516		$	1,708,152

As of September 30, 2021, we owned six properties that were classified as held for sale. We expect the sale of these properties to close in the fourth quarter of 2021 or first quarter of 2022. The table below summarizes our held for sale properties.

Property Name	Location	Units		Net Carrying Value
Crestmont	Atlanta, GA	228		$	14,791
Creekside Corners	Atlanta, GA	444			44,478
Riverchase	Indianapolis, IN	216			17,672
Heritage Park	Oklahoma City, OK	453			16,405
Raindance	Oklahoma City, OK	504			13,163
Haverford Place	Louisville, KY	160			13,900
Total			2,005	$	120,409

Acquisitions

The following table summarizes the aggregate relative fair value of the assets and liabilities associated with the properties acquired during the nine-month period ended September 30, 2021, on the date of acquisition, accounted for under FASB ASC Topic 805-50-15-3.

Description	Fair Value of Assets Acquired During the Nine Months Ended September 30, 2021
Assets acquired:
Investments in real estate (a)	$	139,336
Other assets		33
Intangible assets		757
Total assets acquired	$	140,126
Liabilities assumed:
Accounts payable and accrued expenses	$	795
Other liabilities		100
Total liabilities assumed		895
Estimated fair value of net assets acquired	$	139,231

(a) Included $177 of property related acquisition costs capitalized during the nine months ended September 30, 2021.

Dispositions

The following table summarizes the dispositions for the nine months ended September 30, 2021:

Property Name	Date of Sale	Sale Price		Gain on sale (1)
Kings Landing	07/28/2021	$	40,100	$	11,492
Total		$	40,100	$	11,492

(1) The gain for this property is net of $295 of debt prepayment costs.

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Indebtedness

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Indebtedness

NOTE 4: Indebtedness

The following tables contain summary information concerning our indebtedness as of September 30, 2021:

Debt:	Outstanding Principal		Unamortized Debt Issuance Costs			Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured credit facility (1)	$	137,503	$	(1,179	)	$	136,324	Floating	1.4%		1.6
Unsecured term loans		500,000		(2,156	)		497,844	Floating	1.3%		3.4
Mortgages (2)		385,508		(947	)		384,561	Fixed	3.8%		2.8
Total Debt	$	1,023,011	$	(4,282	)	$	1,018,729		2.3%		2.9

(1) The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.   

(2) Includes indebtedness associated with real estate held for sale.

On March 1, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $5,975. The property mortgage had a weighted-average rate of 5.7%.   

On April 5, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage and made partial

paydowns on another mortgage totaling $13,666. The property mortgages had a weighted-average rate of 4.2%.

On May 18, 2021, we entered into a Second Amended and Restated Credit Agreement which provided for a $550,000 unsecured credit facility (the “Facility) that consists of a $350,000 revolving line of credit (the “Unsecured Revolving Line of Credit”) and a new $200,000 senior term loan (the “New Unsecured Term Loan”). Additionally, we have the right to increase the aggregate amount of the Facility to up to $600,000, subject to certain terms and conditions. The maturity date on borrowings outstanding under the Unsecured Revolving Line of Credit is May 9, 2023, subject to our option to extend the revolving commitment for two additional 6-month periods under certain circumstances, including a payment of an extension fee. The maturity date on the New Unsecured Term Loan is May 18, 2026. We may prepay the Facility, in whole or in part, at any time without prepayment fee or penalty. At our option, borrowings under the Unsecured Revolving Line of Credit will bear interest at a rate equal to either (i) the 1-month LIBOR rate plus a margin of 125 to 200 basis points, or (ii) a base rate plus a margin of 25 to 100 basis points and borrowings under the New Unsecured

Term Loan will bear interest at a rate equal to either (i) the LIBOR rate plus a margin of 120 to 190 basis points, or (ii) a base rate plus a margin of 20 to 90 basis points. The applicable margin is determined based upon our total consolidated leverage ratio. Substantially all of the proceeds of the New Unsecured Term Loan were applied at closing to repay the outstanding balance under the revolving credit facility established under the prior credit agreement. We recognized the refinance of the Unsecured Revolving Line of Credit as a modification of debt. The New Unsecured Term Loan was accounted for as an issuance of new debt. We incurred upfront costs of $1,200 associated with this transaction.

On July 1, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $18,650. The property mortgage had a weighted-average rate of 3.4%.  On July 30, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $15,991. The property mortgage had a weighted-average rate of 3.7%.

The following table contains summary information concerning our indebtedness as of September 30, 2021:

	Scheduled maturities on our indebtedness outstanding as of September 30, 2021
Debt:	2021		2022		2023		2024		2025		Thereafter
Unsecured credit facility	$	—	$	—	$	137,503	$	—	$	—	$	—
Unsecured term loans		—		—		—		300,000		—		200,000
Mortgages (1)		7,428		35,003		105,879		34,754		160,152		42,292
Total	$	7,428	$	35,003	$	243,382	$	334,754	$	160,152	$	242,292

(1) Includes indebtedness associated with real estate held for sale.

The following table contains summary information concerning our indebtedness as of December 31, 2020:

Debt:	Outstanding Principal		Unamortized Debt Issuance Costs			Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured credit facility (1)	$	184,802	$	(1,692	)	$	183,110	Floating	1.6%		2.4
Unsecured term loans		300,000		(1,241	)		298,759	Floating	1.5%		3.3
Mortgages		465,092		(1,275	)		463,817	Fixed	3.9%		3.2
Total Debt	$	949,894	$	(4,208	)	$	945,686		2.7%		3.1

(1) The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

During the nine months ended September 30, 2021, in connection with a property disposition, we extinguished a property mortgage totaling $19,618.

As of September 30, 2021, we were in compliance with all financial covenants contained in the documents governing our indebtedness.

On October 1, 2021, we drew down on our unsecured credit facility to extinguish a property mortgage totaling $19,370. The property mortgage had a weighted-average rate of 3.4%.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2021

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

NOTE 5: Derivative Financial Instruments

The following table summarizes the aggregate notional amounts and estimated net fair values of our derivative instruments as of September 30, 2021 and December 31, 2020:

	As of September 30, 2021						As of December 31, 2020
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swap	$	150,000	$	—		8,852	$	150,000	$	—	$	694
Interest rate collars		250,000		—		8,640		250,000		—		13,331
Forward interest rate swaps		—		1,168		—		—		—		15,817
Total	$	400,000	$	1,168		17,492	$	400,000	$	—	$	29,842

Effective interest rate swaps and caps are reported in accumulated other comprehensive income, and the fair value of these hedge agreements is recorded as derivative assets or liabilities on the face of our consolidated balance sheet.

For our interest rate swap and collars that are considered highly effective hedges, we reclassified realized losses of $1,926 and $4,939 to earnings within interest expense for the three and nine months ended September 30, 2021, respectively, and we expect $9,173 to be reclassified out of accumulated other comprehensive income to earnings over the next 12 months.

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Stockholders' Equity and Noncontrolling Interests

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Stockholders' Equity and Noncontrolling Interests

NOTE 6: Stockholders’ Equity and Noncontrolling Interests

Stockholders’ Equity

On March 15, 2021, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on April 23, 2021 to common stockholders of record as of April 2, 2021.

On June 14, 2021, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on July 23, 2021 to common stockholders of record as of July 2, 2021.

On September 13, 2021, our board of directors declared a dividend of $0.12 per share on our common stock, which was paid on October 22, 2021 to common stockholders of record as of October 1, 2021.

During the three and nine months ended September 30, 2021, we also paid $0 and $278, respectively, of dividends on restricted common share awards that vested during the period.

On November 13, 2020, we entered into an equity distribution agreement pursuant to which we may from time to time offer and sell shares of our common stock having an aggregate offering price of up to $150,000 (the “ATM Program”) in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. Under the ATM Program, we may also enter into one or more forward sale transactions for the sale of shares of our common stock on a forward basis. During the fourth quarter of 2020 and the first half of 2021, we sold 2,932,000 shares on a forward basis under the ATM program. On June 29, 2021, the forward sale transactions were all physically settled and we issued 2,932,000 shares of common stock for a total of $41,671 in net proceeds.

On July 27, 2021, we entered into an underwriting agreement with Barclays Capital Inc. and BMO Capital Markets Corp., as representatives of the several underwriters named therein (collectively, the “Underwriters”), BMO Capital Markets Corp., in its capacity as agent (in such capacity, the “Forward Seller”) for Bank of Montreal, as forward counterparty (the “Forward Counterparty”) related to the offering of an aggregate of 16,100,000 shares of our common stock at a price to the Underwriters of $17.04 per share consisting of 16,100,000 shares of common stock offered by the Forward Seller in connection with the forward sale agreements described below (inclusive of 2,100,000 shares offered pursuant to the Underwriter’s option to purchase additional shares, which was exercised in full).  We did not initially receive any proceeds from the sale of our common stock by the Forward Seller. We completed the offering on July 30, 2021.

In connection with the offering, we also entered into two forward sale agreements. The first forward sale agreement (the “Initial Forward Sale Agreement”), dated July 27, 2021, with the Forward Seller and Forward Counterparty, and the second forward sale agreement (the “Additional Forward Sale Agreement”, together with the Initial Forward Sale Agreement, the “Forward Sale Agreements”), dated July 29, 2021, with the Forward Seller and the Forward Counterparty. In connection with the Forward Sale Agreements, the Forward Seller borrowed from third parties and sold to the Underwriters an aggregate of 16,100,000 shares of our common stock that was sold in the offering. As of September 30, 2021, 16,100,000 shares of our common stock remain to be settled under the Forward Sale Agreements, which if physically settled would provide additional proceeds to us of $272,156 based on the forward price as of September 30, 2021. We expect to physically settle the Forward Sale Agreements and receive proceeds from the sale of those shares upon one or more such physical settlements within approximately twelve months from the date of the prospectus, or July 30, 2022, the scheduled maturity date of the Forward Sale Agreements. Although we expect to settle the Forward Sale Agreements entirely by the physical delivery of shares of our common stock for cash proceeds, we may also elect to cash or net share settle all or a portion of our obligations under the Forward Sale Agreements, in which case, we may receive or owe cash or shares of our common stock from or to the Forward Seller. The Forward Sale Agreements provide for an initial forward sale price of $17.04 per share, subject to certain adjustments pursuant to the terms of each of the Forward Sale Agreements. The Forward Sale Agreements are subject to early termination or settlement under certain circumstances.    

We evaluated the accounting for the forward sale transactions under FASB ASC Topic 480 “Distinguishing Liabilities from Equity” and FASB ASC Topic 815 “Derivatives and Hedging”.  As the forward sale transactions are considered indexed to our own equity and since they meet the equity classification conditions in ASC 815-40-25, the forward sale transactions have been classified as equity.   

We filed Articles of Amendment with the State Department of Assessments and Taxation of Maryland to increase the number of authorized shares of common stock, $0.01 par value, from 300,000,000 shares to 500,000,000 shares, effective July 27, 2021.

Noncontrolling Interest

During the nine months ended September 30, 2021, holders of IROP units exchanged 122,155 units for 122,155 shares of our common stock. As of September 30, 2021, 552,360 IROP units held by unaffiliated third parties remain outstanding.

On March 15, 2021, our board of directors declared a dividend of $0.12 per unit, which was paid on April 23, 2021 to IROP LP unitholders of record as of April 2, 2021.

On June 14, 2021, our board of directors declared a dividend of $0.12 per unit, which was paid on July 23, 2021 to IROP LP unitholders of record as of July 2, 2021.

On September 13, 2021, our board of directors declared a dividend of $0.12 per unit, which was paid on October 22, 2021 to IROP LP unitholders of record as of October 1, 2021.

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Equity Compensation Plans

9 Months Ended

Sep. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Compensation Plans

NOTE 7: Equity Compensation Plans

Long Term Incentive Plan

In May 2016, our shareholders approved and our board of directors adopted an amended and restated Long Term Incentive Plan (the “Incentive Plan”), which provides for the grants of awards to our employees, officers, directors, trustees, consultants or advisors (and those of our affiliates). The Incentive Plan authorizes the grant of restricted or unrestricted shares of our common stock, performance-based restricted share units (“PSUs”), non-qualified and incentive stock options, restricted stock units (“RSUs”), stock appreciation rights (“SARs”), dividend equivalents and other stock- or cash-based awards. In conjunction with the amendment, the number of shares of common stock issuable under the Incentive Plan was increased to 4,300,000 shares and the term of the incentive plan was extended to May 12, 2026.  

Under the Incentive Plan, we have granted restricted shares, RSUs, and PSUs to our employees.  These awards generally vest or vested over a two- to four-year period.  In addition, we have granted unrestricted shares to our non-employee directors.  These awards generally vest or vested immediately. A summary of restricted common share award and RSU activity is presented below.    

	2021
	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Balance, January 1,		406,849		$	11.68
Granted		212,438			14.42
Vested		(200,559	)		11.74
Forfeited		(29,664	)		13.45
Balance, September 30, (1)		389,064		$	13.01

(1) The outstanding award balance above included 135,366 and 67,381 RSUs as of September 30, 2021 and December 31, 2020, respectively.

On February 18, 2021, our compensation committee awarded 254,493 PSUs to our named executive officers. The number of PSUs earned will be based on attainment of certain performance criteria over a three-year period, with the actual number of shares issuable ranging between 0 and 150% of the number of PSUs granted. Half of any PSUs earned will vest, and shares will be issued in respect thereof, immediately following the end of the three-year performance period; the remaining half of any PSUs earned will vest, and shares will be issued in respect thereof, after an additional one-year period of service.

During the nine months ended September 30, 2021 and 2020, a portion of the RSUs and PSUs granted were issued to employees who are retirement eligible. The fact that the grantees are retirement eligible resulted in immediate recognition of the associated stock-based compensation expense totaling $2,112 and $1,667, respectively.

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Earnings Per Share

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 8: Earnings Per Share

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income	$	11,564		$	1,092		$	16,064		$	1,517
Income allocated to noncontrolling interest		(62	)		(2	)		(90	)		(10	)
Net income allocable to common shares		11,502			1,090			15,974			1,507
Weighted-average shares outstanding—Basic		104,918,674			94,456,987			102,882,723			93,261,757
Weighted-average shares outstanding—Diluted		107,668,675			95,222,623			104,062,661			94,099,091
Earnings per share—Basic	$	0.11		$	0.01		$	0.16		$	0.02
Earnings per share—Diluted	$	0.11		$	0.01		$	0.15		$	0.02

Certain IROP units, restricted stock awards, RSUs, PSUs, and forward sale agreements were excluded from the earnings (loss) per share computation because their effect would have been anti-dilutive, totaling 552,360 and 552,360 for the three and nine months ended September 30, 2021, respectively, and 7,653,516 and 7,645,986 for the three and nine months ended September 30, 2020, respectively.

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Other Disclosures

9 Months Ended

Sep. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Other Disclosures

NOTE 9: Other Disclosures

Risks and Uncertainties

Currently, one of the most significant risks and uncertainties is the duration and scope of the ongoing COVID-19 pandemic, which has disrupted businesses and slowed economic activity. In response to the COVID-19 pandemic, we have made operational and policy changes to: (1) comply with governmental mandates, including eviction moratoria, on a jurisdiction by jurisdiction basis; (2) protect our employees, residents, and prospective residents; and (3) minimize the adverse financial impact to us. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors, many of which are not within management’s control, and that we are unable to predict at this time, including but not limited to: (1) the duration and scope of the COVID-19 pandemic; (2) the COVID-19 pandemic’s impact on current and future economic activity; and (3) the actions of governments, businesses and individuals in response to the COVID-19 pandemic.

Litigation

We are subject to various legal proceedings and claims that arise in the ordinary course of our business operations. Matters which arise out of allegations of bodily injury, property damage, and employment practices are generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, we currently believe the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or cash flows.

Loss Contingencies

We record an accrual for loss contingencies when a loss is probable and the amount of the loss can be reasonably estimated. Management reviews these accruals quarterly and makes revisions based on changes in facts and circumstances. When a loss contingency is not both probable and reasonably estimable, management does not accrue the loss. However, if the loss (or an additional loss in excess of an earlier accrual) is at least a reasonable possibility and material, then management discloses a reasonable estimate of the possible loss, or range of loss, if such reasonable estimate can be made. If we cannot make a reasonable estimate of the possible loss, or range of loss, then a statement to that effect is disclosed.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

a. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by management in accordance with generally accepted accounting principles in the United States (“GAAP”). Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated financial statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2020 included in our 2020 Annual Report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position and consolidated results of operations and cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year.

Principles of Consolidation

b. Principles of Consolidation

The consolidated financial statements reflect our accounts and the accounts of IROP and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.  Pursuant to the Financial Accounting Standards Board (the “FASB”)

Accounting Standards Codification Topic 810, “Consolidation”, IROP is considered a variable interest entity to which we are the primary beneficiary.  As our significant asset is our investment in IROP, substantially all of our assets and liabilities represent the assets and liabilities of IROP.

Use of Estimates

c. Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

d. Cash and Cash Equivalents

Cash and cash equivalents include cash held in banks and highly liquid investments with maturities of three months or less when purchased.  Cash, including amounts restricted, may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit of $250 per institution.  We mitigate credit risk by placing cash and cash equivalents with major financial institutions.  To date, we have not experienced any losses on cash and cash equivalents.

Restricted Cash

e. Restricted Cash

Restricted cash includes escrows of our funds held by lenders to fund certain expenditures, such as real estate taxes and insurance, or to be released at our discretion upon the occurrence of certain pre-specified events.  As of September 30, 2021 and December 31, 2020, we had $6,138 and $4,864, respectively, of restricted cash.

Investments in Real Estate

f. Investments in Real Estate

Investments in real estate are recorded at cost less accumulated depreciation. Costs that both add value and appreciably extend the useful life of an asset are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

Investments in real estate are classified as held for sale in the period in which certain criteria are met including when management commits to a plan to sell, an active program to locate a buyer has been initiated, the sale is probable, and actions required to complete the plan of sale indicate that it is unlikely that significant changes to the plan of sale will be made or the plan of sale will be withdrawn.

Allocation of Purchase Price of Acquired Assets

The properties we acquire are generally accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs related to the acquisition, are accumulated and then allocated to the individual assets and liabilities acquired based upon their relative fair value.  Transaction costs and fees incurred related to the financing of an acquisition are capitalized and amortized over the life of the related financing.

We estimate the fair value of acquired tangible assets (consisting of land, building and improvements), identified intangible assets (consisting of in-place leases), and assumed debt at the date of acquisition, based on the evaluation of information and estimates available at that date.

The aggregate value of in-place leases is determined by evaluating various factors, including the terms of the leases that are in place and assumed lease-up periods. The value assigned to in-place lease assets is amortized over the assumed lease up period, typically six months. During the three and nine months ended September 30, 2021, we acquired in-place leases with a value of $0 and $757, respectively, as part of related property acquisitions that are discussed further in Note 3. For the three and nine months ended September 30, 2021, we recorded $368 and $1,203, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2020, we recorded $73 and $631, respectively, of amortization expense for intangible assets. For the three and nine months ended September 30, 2021, we wrote-off fully amortized intangible assets of $0 and $792, respectively. For the three and nine months ended September 30, 2020, we wrote-off fully amortized intangible assets of $211 and $1,171, respectively. As of September 30, 2021, we expect to record additional amortization expense on current in-place intangible assets of $346 for the remainder of 2021.  

Impairment of Long-Lived Assets

Management evaluates the recoverability of our investment in real estate assets, including related identifiable intangible assets, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment”. This statement requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that recoverability of the assets is not assured.

Management reviews our long-lived assets on an ongoing basis and evaluates the recoverability of the carrying value when there is an indicator of impairment. An impairment charge is recorded when it is determined that the carrying value of the asset exceeds the fair value. The estimated cash flows used for the impairment analysis and the determination of estimated fair value are based on our plans for the respective assets and our views of market and economic conditions. The estimates consider matters such as current and historical rental rates, occupancies for the respective and/or comparable properties, and recent sales data for comparable properties. Changes in estimated future cash flows due to changes in our plans or views of market and economic conditions could result in recognition of impairment losses, which, under the applicable accounting guidance, could be substantial.

Depreciation Expense

Depreciation expense for real estate assets is computed using a straight-line method based on a life of 40 years for buildings and improvements and five to ten years for equipment and fixtures.  For the three and nine months ended September 30, 2021, we recorded $17,016 and $49,496 of depreciation expense, respectively. For the three and nine months ended September 30, 2020, we recorded $15,159 and $44,660 of depreciation expense, respectively.

Casualty Loss

Occasionally, we incur losses at our communities from wind storms, floods, fires and similar hazards. Sometimes, a portion of these losses are not fully covered by our insurance policies due to deductibles. In these cases, we estimate the carrying value of the damaged property and record a casualty loss for the difference between the estimated carrying value and the insurance proceeds. During the three and nine months ended September 30, 2021, we incurred $0 and $359 of casualty losses, respectively. We incurred $0 and $411casualty losses during the three and nine months ended September 30, 2020.

Investments in Unconsolidated Real Estate Entities

g. Investments in unconsolidated real estate entities

We invest in joint ventures in which we exercise significant influence but do not control the major decisions of the joint venture. Therefore, we account for these investments using the equity method of accounting.  Under the equity method of accounting, the investments are carried at cost plus our share of net earnings or losses.  As of September 30, 2021 and December 31, 2020, the carrying value of our investments in joint ventures totaled $13,561 and $0, respectively, and was recorded as a separate line item on the face of our consolidated balance sheet. We recognized no income or losses from equity method investments during the three and nine months ended September 30, 2021 and 2020.

Revenue and Expenses

h. Revenue and Expenses

Rental and other property revenue

We apply FASB ASC Topic 842, “Leases” with respect to our accounting for rental income.  We primarily lease apartment units under operating leases generally with terms of one year or less. Rental payments are generally due monthly and rental revenues are recognized on an accrual basis when earned.  We have elected to account for lease (i.e. fixed payments including base rent) and non-lease components (i.e. tenant reimbursements and certain other service fees) as a single combined operating lease component since (1) the timing and pattern of transfer of the lease and non-lease components is the same, (2) the lease component is the predominant element, and (3) the combined single lease component would be classified as an operating lease.

We make ongoing estimates of the collectability of our base rents, tenant reimbursements, and other service fees included within rental and other property revenue.  If collectability is not probable, we adjust rental and other property income for the amount of uncollectible revenue.

Due to the COVID-19 pandemic, some of our residents have experienced difficulty making rent payments and, as a result, our rent receivables have increased compared to historical levels. This caused us to further evaluate collectability and we recorded $121 and $246 provision for bad debts during the three and nine months ended September 30, 2021, respectively, to appropriately reflect management’s estimate for uncollectible accounts. The provision for bad debts was recorded as a reduction to rental and other property income in our consolidated statements of operations. The total adjustment to rental and other property income for the three and nine months ended September 30, 2021 was $655 and $1,678, respectively. The total adjustment to rental and other property income for the three and nine months ended September 30, 2020 was $340 and $1,428, respectively.

To support our residents that were economically impacted and unable to pay their rent in full during 2020, we offered residents deferred rent payment plans whereby the resident could defer between 25% and 75% of their monthly rent for between one and three months. Residents were required to provide evidence of financial hardship and commit to a full 12-month lease term, which provided a longer period over which the deferred rent could be repaid. We accounted for the deferred payment plans as if no change had been made to the original lease agreement and continued to recognize rental income while increasing lease receivables from residents. As of September 30, 2021 and December 31, 2020, deferred rents receivable from residents totaled $0 and $175, respectively.  

For the three and nine months ended September 30, 2021, we recognized revenues of $28 and $69, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers. For the three and nine months ended September 30, 2020, we recognized revenues of $32 and $184, respectively, related to recoveries of lost rental revenue due to natural disasters and other insurable events from our insurance providers.

Advertising Expenses

For the three and nine months ended September 30, 2021, we incurred $624 and $1,804 of advertising expenses, respectively. For the three and nine months ended September 30, 2020, we incurred $667 and $1,827 of advertising expenses, respectively.

Derivative Instruments

i. Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with our operating and financial structure, as well as to hedge specific anticipated transactions. While these instruments may impact our periodic cash flows, they benefit us by minimizing the risks and/or costs previously described.  The counterparties to these contractual arrangements are major financial institutions with which we and our affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, we are potentially exposed to credit loss. However, because of the high credit ratings of the counterparties, we do not anticipate that any of the counterparties will fail to meet their obligations.

In accordance with FASB ASC Topic 815, “Derivatives and Hedging”, we measure each derivative instrument at fair value and record such amounts in our consolidated balance sheets as either an asset or liability.  For derivatives designated as cash flow hedges, the changes in the fair value of the effective portions of the derivative are reported in other comprehensive income and changes in the fair value of the ineffective portions of cash flow hedges, if any, are recognized in earnings.  For derivatives not designated as hedges (or designated as fair value hedges), the changes in fair value of the derivative instrument are recognized in earnings.  Any derivatives that we designate in hedge relationships are done so at inception.  At inception, we determine whether or not the derivative is highly effective in offsetting changes in the designated interest rate risk associated with the identified indebtedness using regression analysis.  At each reporting period, we update our regression analysis and use the hypothetical derivative method to measure any ineffectiveness.

Fair Value of Financial Instruments

j. Fair Value of Financial Instruments

In accordance with FASB ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined in FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, are as follows:

• Level 1: Valuations are based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets carried at Level 1 fair value generally are equity securities listed in active markets. As such, valuations of these investments do not entail a significant degree of judgment.

• Level 2: Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3: Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

FASB ASC Topic 825, “Financial Instruments” requires disclosure of the fair value of financial instruments for which it is practicable to estimate that value. Given that cash and cash equivalents and restricted cash are short term in nature with limited fair value volatility, the carrying amount is deemed to be a reasonable approximation of fair value and the fair value input is classified as a Level 1 fair value measurement. The fair value input for the derivatives is classified as a Level 2 fair value measurement within the fair value hierarchy. The fair value inputs for our unsecured credit facility and term loans are classified as Level 2 fair value measurements within the fair value hierarchy. The fair value of mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy.  We determine appropriate credit spreads based on the type of debt and its maturity. There were no transfers between levels in the fair value hierarchy for the nine months ended September 30, 2021. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:

	As of September 30, 2021				As of December 31, 2020
Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Cash and cash equivalents	$	8,720	$	8,720	$	8,751	$	8,751
Restricted cash		6,138		6,138		4,864		4,864
Derivative assets		1,168		1,168		—		—
Liabilities
Debt:
Unsecured credit facility		136,324		137,503		183,110		184,802
Unsecured term loans		497,844		500,000		298,759		300,000
Mortgages (1)		384,561		396,504		463,817		479,929
Derivative liabilities		17,492		17,492		29,842		29,842

(1) Includes indebtedness associated with real estate held for sale.

Deferred Financing Costs

k. Deferred Financing Costs

Costs incurred in connection with debt financing are deferred and classified within indebtedness and charged to interest expense over the terms of the related debt agreements, under the effective interest method.

Office Leases

l. Office Leases

In accordance with FASB ASC Topic 842, “Leases”, lessees are required to recognize a right-of-use asset and a lease liability on the balance sheet at the lease commencement date for all leases, except those leases with terms of less than a year.  We lease corporate office space under leases with terms of up to 10 years and that may include extension options, but that do not include any residual value guarantees or restrictive covenants. As of September 30, 2021, we have $2,360 of operating lease right-of-use assets and $2,701 of operating lease liabilities related to our corporate office leases. The operating lease right-of-use assets are presented within other assets and the operating lease liabilities are presented within other liabilities in our consolidated balance sheet. We recorded $172 and $510 of total operating lease expense during the three and nine months ended September 30, 2021, which is recorded within property management expense and general and administrative expenses in our condensed consolidated statements of operations.    

Income Taxes

m. Income Taxes

We have elected to be taxed as a REIT.  Accordingly, we recorded no income tax expense for the three and nine months ended September 30, 2021 and 2020.

To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our ordinary taxable income to stockholders.  As a REIT, we generally are not subject to federal income tax on taxable income that we distribute to our stockholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions.  Such an event could materially adversely affect our net income and net cash available for distribution to stockholders; however, we believe that we are organized and operate in such a manner as to qualify and maintain treatment as a REIT and intend to operate in such a manner so that we will remain qualified as a REIT for federal income tax purposes.  

Recent Accounting Pronouncements

n. Recent Accounting Pronouncements

Below is a brief description of recent accounting pronouncements that could have a material effect on our financial statements.  

Adopted Within these Financial Statements

In March 2020, the FASB issued an accounting standard classified under FASB ASC Topic 848, “Reference Rate Reform.” The amendments in this update contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASC 848 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.  We will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. 

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Schedule of Carrying Amount and Fair Value of Financial Instrument

The fair value of mortgage indebtedness is based on a discounted cash flows valuation technique. As this technique utilizes current credit spreads, which are generally unobservable, this is classified as a Level 3 fair value measurement within the fair value hierarchy.  We determine appropriate credit spreads based on the type of debt and its maturity. There were no transfers between levels in the fair value hierarchy for the nine months ended September 30, 2021. The following table summarizes the carrying amount and the fair value of our financial instruments as of the periods indicated:

	As of September 30, 2021				As of December 31, 2020
Financial Instrument	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Cash and cash equivalents	$	8,720	$	8,720	$	8,751	$	8,751
Restricted cash		6,138		6,138		4,864		4,864
Derivative assets		1,168		1,168		—		—
Liabilities
Debt:
Unsecured credit facility		136,324		137,503		183,110		184,802
Unsecured term loans		497,844		500,000		298,759		300,000
Mortgages (1)		384,561		396,504		463,817		479,929
Derivative liabilities		17,492		17,492		29,842		29,842

(1) Includes indebtedness associated with real estate held for sale.

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Investments in Real Estate (Tables)

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Summary of Investments in Real Estate

The following table summarizes our investments in real estate:

	As of September 30, 2021			As of December 31, 2020			Depreciable Lives (In years)
Land	$	238,221		$	251,365			—
Building		1,525,395			1,527,535			40
Furniture, fixtures and equipment		141,144			137,870		5-10
Total investment in real estate	$	1,904,760		$	1,916,770
Accumulated depreciation		(223,244	)		(208,618	)
Investments in real estate, net	$	1,681,516		$	1,708,152

Summary of Held for Sale Property

The table below summarizes our held for sale properties.

Property Name	Location	Units		Net Carrying Value
Crestmont	Atlanta, GA	228		$	14,791
Creekside Corners	Atlanta, GA	444			44,478
Riverchase	Indianapolis, IN	216			17,672
Heritage Park	Oklahoma City, OK	453			16,405
Raindance	Oklahoma City, OK	504			13,163
Haverford Place	Louisville, KY	160			13,900
Total			2,005	$	120,409

Summary of Fair Value of Assets and Liabilities

The following table summarizes the aggregate relative fair value of the assets and liabilities associated with the properties acquired during the nine-month period ended September 30, 2021, on the date of acquisition, accounted for under FASB ASC Topic 805-50-15-3.

Description	Fair Value of Assets Acquired During the Nine Months Ended September 30, 2021
Assets acquired:
Investments in real estate (a)	$	139,336
Other assets		33
Intangible assets		757
Total assets acquired	$	140,126
Liabilities assumed:
Accounts payable and accrued expenses	$	795
Other liabilities		100
Total liabilities assumed		895
Estimated fair value of net assets acquired	$	139,231

(a) Included $177 of property related acquisition costs capitalized during the nine months ended September 30, 2021.

Summary of Disposition of Property

Dispositions

The following table summarizes the dispositions for the nine months ended September 30, 2021:

Property Name	Date of Sale	Sale Price		Gain on sale (1)
Kings Landing	07/28/2021	$	40,100	$	11,492
Total		$	40,100	$	11,492

(1) The gain for this property is net of $295 of debt prepayment costs.

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Indebtedness (Tables)

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Summary Information Concerning Indebtedness

The following tables contain summary information concerning our indebtedness as of September 30, 2021:

Debt:	Outstanding Principal		Unamortized Debt Issuance Costs			Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured credit facility (1)	$	137,503	$	(1,179	)	$	136,324	Floating	1.4%		1.6
Unsecured term loans		500,000		(2,156	)		497,844	Floating	1.3%		3.4
Mortgages (2)		385,508		(947	)		384,561	Fixed	3.8%		2.8
Total Debt	$	1,023,011	$	(4,282	)	$	1,018,729		2.3%		2.9

(1) The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.   

(2) Includes indebtedness associated with real estate held for sale.

The following table contains summary information concerning our indebtedness as of September 30, 2021:

	Scheduled maturities on our indebtedness outstanding as of September 30, 2021
Debt:	2021		2022		2023		2024		2025		Thereafter
Unsecured credit facility	$	—	$	—	$	137,503	$	—	$	—	$	—
Unsecured term loans		—		—		—		300,000		—		200,000
Mortgages (1)		7,428		35,003		105,879		34,754		160,152		42,292
Total	$	7,428	$	35,003	$	243,382	$	334,754	$	160,152	$	242,292

(1) Includes indebtedness associated with real estate held for sale.

The following table contains summary information concerning our indebtedness as of December 31, 2020:

Debt:	Outstanding Principal		Unamortized Debt Issuance Costs			Carrying Amount		Type	Weighted Average Rate	Weighted Average Maturity (in years)
Unsecured credit facility (1)	$	184,802	$	(1,692	)	$	183,110	Floating	1.6%		2.4
Unsecured term loans		300,000		(1,241	)		298,759	Floating	1.5%		3.3
Mortgages		465,092		(1,275	)		463,817	Fixed	3.9%		3.2
Total Debt	$	949,894	$	(4,208	)	$	945,686		2.7%		3.1

(1) The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2021

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of Aggregate Amount and Estimated Net Fair Values of Our Derivative Instruments

The following table summarizes the aggregate notional amounts and estimated net fair values of our derivative instruments as of September 30, 2021 and December 31, 2020:

	As of September 30, 2021						As of December 31, 2020
	Notional		Fair Value of Assets		Fair Value of Liabilities		Notional		Fair Value of Assets		Fair Value of Liabilities
Cash flow hedges:
Interest rate swap	$	150,000	$	—		8,852	$	150,000	$	—	$	694
Interest rate collars		250,000		—		8,640		250,000		—		13,331
Forward interest rate swaps		—		1,168		—		—		—		15,817
Total	$	400,000	$	1,168		17,492	$	400,000	$	—	$	29,842

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Equity Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Restricted Common Share Awards and RSU of Incentive Plan

Under the Incentive Plan, we have granted restricted shares, RSUs, and PSUs to our employees.  These awards generally vest or vested over a two- to four-year period.  In addition, we have granted unrestricted shares to our non-employee directors.  These awards generally vest or vested immediately. A summary of restricted common share award and RSU activity is presented below.    

	2021
	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Balance, January 1,		406,849		$	11.68
Granted		212,438			14.42
Vested		(200,559	)		11.74
Forfeited		(29,664	)		13.45
Balance, September 30, (1)		389,064		$	13.01

(1) The outstanding award balance above included 135,366 and 67,381 RSUs as of September 30, 2021 and December 31, 2020, respectively.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Reconciliation of Basic and Diluted Earnings (Loss) Per Share

The following table presents a reconciliation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net income	$	11,564		$	1,092		$	16,064		$	1,517
Income allocated to noncontrolling interest		(62	)		(2	)		(90	)		(10	)
Net income allocable to common shares		11,502			1,090			15,974			1,507
Weighted-average shares outstanding—Basic		104,918,674			94,456,987			102,882,723			93,261,757
Weighted-average shares outstanding—Diluted		107,668,675			95,222,623			104,062,661			94,099,091
Earnings per share—Basic	$	0.11		$	0.01		$	0.16		$	0.02
Earnings per share—Diluted	$	0.11		$	0.01		$	0.15		$	0.02

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Organization - Additional Information (Detail) $ / shares in Units, $ in Thousands		3 Months Ended	9 Months Ended
	Jul. 26, 2021 $ / shares	Sep. 30, 2021 USD ($) Property $ / shares	Sep. 30, 2021 USD ($) Property $ / shares	Jul. 27, 2021 $ / shares	Dec. 31, 2020 $ / shares
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of multifamily properties owned | Property		57	57
Number of units located with multifamily properties | Property		16,109	16,109
Common stock, par value	$ 0.01	$ 0.01	$ 0.01	$ 0.01	$ 0.01
Merger Agreement
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Common stock, par value	0.01
Payments for Merger Related Costs | $		$ 5,276	$ 5,276
Merger Agreement | Steadfast Apartment REIT, Inc.
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Common stock, par value	$ 0.01
Merger Agreement | Steadfast Apartment REIT, Inc. | Common Shares
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Right to receive shares exchange ratio for each share	0.905
Merger Agreement | Steadfast Apartment REIT Operating Partnership, L.P. | Common Units
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Right to receive shares exchange ratio for each share	1

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Significant Accounting Policies [Line Items]
Federal Deposit Insurance Corporation deposit insurance limit per institution	$ 250,000	$ 250,000		$ 250,000
Restricted cash	6,138,000	6,138,000		$ 6,138,000		$ 4,864,000
Acquisition of above-market in-place leases, amortization period				6 months
Amortization expense for intangible assets		368,000	$ 73,000	$ 1,203,000	$ 631,000
Write-off of fully amortized intangible assets		0	211,000	792,000	1,171,000
Additional amortization expense on current in-place intangible assets for the remainder of 2021	346,000	346,000		346,000
Depreciation expense		17,016,000	15,159,000	49,496,000	44,660,000
Casualty losses		0	0	359,000	411,000
Investments in joint ventures	13,561,000	13,561,000		13,561,000		0
Income or losses from equity method investments		0	0	0	0
Bad debt expense		655,000	340,000	1,678,000	1,428,000
Deferred rent receivable from residents	0	0		0		$ 175,000
Advertising expenses		624,000	667,000	1,804,000	1,827,000
Transfers of assets between Level 1 and Level 2	0	0		0
Transfers of assets between Level 2 and Level 1	0	0		0
Transfers of liabilities between Level 1 and Level 2	0	0		0
Transfers of liabilities between Level 2 and Level 1	0	0		0
Income tax expense		0	0	$ 0	0
Percentage of minimum taxable income distributable to stockholders				90.00%
Subsequent disqualification period if failed to qualify as REIT				4 years
Topic 842
Significant Accounting Policies [Line Items]
Right-of-use assets	$ 2,360,000	$ 2,360,000		$ 2,360,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other assets	Other assets		Other assets
Lease liability	$ 2,701,000	$ 2,701,000		$ 2,701,000
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Other liabilities	Other liabilities		Other liabilities
Total operating lease expense		$ 172,000		$ 510,000
Natural Disasters and Other Insurable Events
Significant Accounting Policies [Line Items]
Rent revenue recognized		28,000	$ 32,000	69,000	$ 184,000
COVID-19
Significant Accounting Policies [Line Items]
Bad debt expense		121,000		246,000
Building and Building Improvements
Significant Accounting Policies [Line Items]
Depreciable Lives	40 years
Leases Acquired In Place
Significant Accounting Policies [Line Items]
Acquisition of above-market in-place leases		$ 0		$ 757,000
Minimum
Significant Accounting Policies [Line Items]
Percentage of rent deferment on monthly rent				25.00%
Deferred rent payment term				1 month
Minimum | Equipment and Fixtures
Significant Accounting Policies [Line Items]
Depreciable Lives				5 years
Maximum
Significant Accounting Policies [Line Items]
Cash and cash equivalents maturity period				3 months
Percentage of rent deferment on monthly rent				75.00%
Deferred rent payment term				3 months
Maximum | Topic 842
Significant Accounting Policies [Line Items]
Operating lease term	10 years	10 years		10 years
Maximum | Equipment and Fixtures
Significant Accounting Policies [Line Items]
Depreciable Lives				10 years

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Summary of Significant Accounting Policies - Schedule of Carrying Amount and Fair Value (Detail) - USD ($) $ in Thousands		Sep. 30, 2021		Dec. 31, 2020		Sep. 30, 2020
Assets
Cash and cash equivalents, Carrying Amount		$ 8,720		$ 8,751		$ 9,891
Restricted cash, Carrying Amount		6,138		4,864
Derivative assets, Carrying Amount		1,168
Cash and cash equivalents, Estimated Fair Value		8,720		8,751
Restricted cash, Estimated Fair Value		6,138		4,864
Derivative assets, Estimated Fair Value		1,168
Liabilities
Indebtedness, net of unamortized discount and deferred financing costs, Carrying Amount		1,018,729		945,686
Derivative liabilities, carrying Amount		17,492		29,842
Derivative liabilities, Estimated Fair Value		17,492		29,842
Unsecured Credit Facility
Liabilities
Indebtedness, net of unamortized discount and deferred financing costs, Carrying Amount		136,324	[1]	183,110	[2]
Indebtedness, net of unamortized discount and deferred financing costs, Estimated Fair Value		137,503		184,802
Unsecured Term Loans
Liabilities
Indebtedness, net of unamortized discount and deferred financing costs, Carrying Amount		497,844		298,759
Indebtedness, net of unamortized discount and deferred financing costs, Estimated Fair Value		500,000		300,000
Mortgages
Liabilities
Indebtedness, net of unamortized discount and deferred financing costs, Carrying Amount	[3]	384,561		463,817
Indebtedness, net of unamortized discount and deferred financing costs, Estimated Fair Value	[3]	$ 396,504		$ 479,929

[1] The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.

[2] The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

[3] Includes indebtedness associated with real estate held for sale.

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Investments in Real Estate - Additional Information (Detail)	Sep. 30, 2021 Property
Real Estate Properties [Line Items]
Number of multifamily properties owned	57
Number of units located with multifamily properties	16,109
Held-for-Sale
Real Estate Properties [Line Items]
Number of multifamily properties owned	6

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Investments in Real Estate - Summary of Investments in Real Estate (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Real Estate Properties [Line Items]
Land	$ 238,221	$ 251,365
Building	1,525,395	1,527,535
Furniture, fixtures and equipment	141,144	137,870
Total investment in real estate	1,904,760	1,916,770
Accumulated depreciation	(223,244)	(208,618)
Investments in real estate, net	$ 1,681,516	$ 1,708,152
Building
Real Estate Properties [Line Items]
Depreciable Lives	40 years
Furniture, fixtures and equipment | Minimum
Real Estate Properties [Line Items]
Depreciable Lives	5 years
Furniture, fixtures and equipment | Maximum
Real Estate Properties [Line Items]
Depreciable Lives	10 years

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Investments in Real Estate - Summary of Held for Sale Property (Details) $ in Thousands	Sep. 30, 2021 USD ($) Property
Real Estate Properties [Line Items]
Units | Property	2,005
Real estate held for sale | $	$ 120,409
Crestmont | Atlanta, GA
Real Estate Properties [Line Items]
Units | Property	228
Real estate held for sale | $	$ 14,791
Creekside Corners | Atlanta, GA
Real Estate Properties [Line Items]
Units | Property	444
Real estate held for sale | $	$ 44,478
Riverchase | Indianapolis, IN
Real Estate Properties [Line Items]
Units | Property	216
Real estate held for sale | $	$ 17,672
Heritage Park | Oklahoma City, OK
Real Estate Properties [Line Items]
Units | Property	453
Real estate held for sale | $	$ 16,405
Raindance | Oklahoma City, OK
Real Estate Properties [Line Items]
Units | Property	504
Real estate held for sale | $	$ 13,163
Haverford Place | Louisville, KY
Real Estate Properties [Line Items]
Units | Property	160
Real estate held for sale | $	$ 13,900

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Investments in Real Estate - Summary of Aggregate Fair Value of Assets and Liabilities (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
Assets acquired:
Investments in real estate	$ 139,336	[1]
Other assets	33
Intangible assets	757
Total assets acquired	140,126
Liabilities assumed:
Accounts payable and accrued expenses	795
Other liabilities	100
Total liabilities assumed	895
Estimated fair value of net assets acquired	$ 139,231

[1] Included $177 of property related acquisition costs capitalized during the nine months ended September 30, 2021.

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Investments in Real Estate - Summary of Aggregate Fair Value of Assets and Liabilities (Parenthetical) (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Business Combinations [Abstract]
Acquisition costs related to property	$ 177

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Investments in Real Estate - Summary of Disposition of Property's (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Real Estate Properties [Line Items]
Sale Price			$ 40,100
Gain on sale	$ 11,492	$ (1,840)	$ 11,492	$ (1,840)
Kings Landing
Real Estate Properties [Line Items]
Date of Sale			Jul. 28, 2021
Sale Price			$ 40,100
Gain on sale			$ 11,492

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Investments in Real Estate - Summary of Disposition of Property's (Parenthetical) (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Real Estate [Abstract]
Debt prepayment costs	$ 295

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Indebtedness - Summary Information Concerning Indebtedness (Detail) - USD ($) $ in Thousands		9 Months Ended		12 Months Ended
		Sep. 30, 2021		Dec. 31, 2020		Jul. 30, 2021	Jul. 01, 2021	Apr. 05, 2021	Mar. 01, 2021
Debt Instrument [Line Items]
Outstanding Principal		$ 1,023,011		$ 949,894
Unamortized Debt Issuance Costs		(4,282)		(4,208)
Carrying Amount		$ 1,018,729		$ 945,686
Weighted Average Rate		2.30%		2.70%
Weighted Average
Debt Instrument [Line Items]
Weighted Average Maturity (in years)		2 years 10 months 24 days		3 years 1 month 6 days
Unsecured Credit Facility
Debt Instrument [Line Items]
Outstanding Principal		$ 137,503	[1]	$ 184,802	[2]
Unamortized Debt Issuance Costs		(1,179)	[1]	(1,692)	[2]
Carrying Amount		$ 136,324	[1]	$ 183,110	[2]
Type		Floating	[1]	Floating	[2]
Weighted Average Rate		1.40%	[1]	1.60%	[2]
Unsecured Credit Facility | Weighted Average
Debt Instrument [Line Items]
Weighted Average Maturity (in years)		1 year 7 months 6 days	[1]	2 years 4 months 24 days	[2]
Unsecured Term Loans
Debt Instrument [Line Items]
Outstanding Principal		$ 500,000		$ 300,000
Unamortized Debt Issuance Costs		(2,156)		(1,241)
Carrying Amount		$ 497,844		$ 298,759
Type		Floating		Floating
Weighted Average Rate		1.30%		1.50%
Unsecured Term Loans | Weighted Average
Debt Instrument [Line Items]
Weighted Average Maturity (in years)		3 years 4 months 24 days		3 years 3 months 18 days
Mortgages
Debt Instrument [Line Items]
Outstanding Principal		$ 385,508	[3]	$ 465,092
Unamortized Debt Issuance Costs		(947)	[3]	(1,275)
Carrying Amount	[3]	$ 384,561		$ 463,817
Type		Fixed	[3]	Fixed
Weighted Average Rate		3.80%	[3]	3.90%		3.70%	3.40%	4.20%	5.70%
Mortgages | Weighted Average
Debt Instrument [Line Items]
Weighted Average Maturity (in years)		2 years 9 months 18 days	[3]	3 years 2 months 12 days

[1] The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.

[2] The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

[3] Includes indebtedness associated with real estate held for sale.

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Indebtedness - Summary Information Concerning Indebtedness (Parenthetical) (Detail) - USD ($)	Sep. 30, 2021		Dec. 31, 2020
Debt Instrument [Line Items]
Outstanding Principal	$ 1,023,011,000		$ 949,894,000
Unsecured Credit Facility
Debt Instrument [Line Items]
Credit facility borrowing capacity	350,000,000		350,000,000
Outstanding Principal	$ 137,503,000	[1]	$ 184,802,000	[2]

[1] The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.

[2] The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

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Indebtedness - Additional Information (Detail) - USD ($)							9 Months Ended
	Oct. 01, 2021	Jul. 30, 2021	Jul. 01, 2021	May 18, 2021	Apr. 05, 2021	Mar. 01, 2021	Sep. 30, 2021		Dec. 31, 2020
Debt Instrument [Line Items]
Weighted average interest rate							2.30%		2.70%
Upfront costs							$ 4,282,000		$ 4,208,000
Mortgages
Debt Instrument [Line Items]
Weighted average interest rate		3.70%	3.40%		4.20%	5.70%	3.80%	[1]	3.90%
Upfront costs							$ 947,000	[1]	$ 1,275,000
Mortgages | Subsequent Event
Debt Instrument [Line Items]
Weighted average interest rate	3.40%
Mortgages-Fixed Rate
Debt Instrument [Line Items]
Mortgage loan related to property disposition							$ 19,618,000
Unsecured Credit Facility
Debt Instrument [Line Items]
Mortgage loan related to property disposition		$ 15,991,000	$ 18,650,000		$ 13,666,000	$ 5,975,000
Weighted average interest rate							1.40%	[2]	1.60%	[3]
Credit facility, revolving line of credit				$ 550,000,000
Credit facility borrowing capacity							$ 350,000,000		$ 350,000,000
Upfront costs							$ 1,179,000	[2]	$ 1,692,000	[3]
Unsecured Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Mortgage loan related to property disposition	$ 19,370,000
Unsecured Credit Facility | Maximum
Debt Instrument [Line Items]
Credit facility borrowing capacity				600,000,000
Unsecured Revolving Line of Credit
Debt Instrument [Line Items]
Credit facility, revolving line of credit				$ 350,000,000
Maturity date				May 09, 2023
Unsecured revolving line of credit, option to extend additional period				6 months
Maturity term description				option to extend the revolving commitment for two additional 6-month periods under certain circumstances, including a payment of an extension fee.
Upfront costs				$ 1,200,000
Unsecured Revolving Line of Credit | Minimum | 1-month LIBOR Rate
Debt Instrument [Line Items]
Debt interest rate				1.25%
Unsecured Revolving Line of Credit | Minimum | Base Rate
Debt Instrument [Line Items]
Debt interest rate				2.50%
Unsecured Revolving Line of Credit | Maximum | 1-month LIBOR Rate
Debt Instrument [Line Items]
Debt interest rate				2.00%
Unsecured Revolving Line of Credit | Maximum | Base Rate
Debt Instrument [Line Items]
Debt interest rate				1.00%
New Unsecured Term Loan
Debt Instrument [Line Items]
Credit facility, revolving line of credit				$ 200,000,000
Maturity date				May 18, 2026
Upfront costs				$ 1,200,000
New Unsecured Term Loan | Minimum | Base Rate
Debt Instrument [Line Items]
Debt interest rate				2.00%
New Unsecured Term Loan | Minimum | LIBOR Rate
Debt Instrument [Line Items]
Debt interest rate				1.20%
New Unsecured Term Loan | Maximum | Base Rate
Debt Instrument [Line Items]
Debt interest rate				9.00%
New Unsecured Term Loan | Maximum | LIBOR Rate
Debt Instrument [Line Items]
Debt interest rate				1.90%

[1] Includes indebtedness associated with real estate held for sale.

[2] The unsecured credit facility total capacity is $350,000, of which $137,503 was outstanding as of September 30, 2021.

[3] The unsecured credit facility total capacity was $350,000, of which $184,802 was outstanding as of December 31, 2020.

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Indebtedness - Maturity of Indebtedness (Detail) $ in Thousands	Sep. 30, 2021 USD ($)
Debt Instrument [Line Items]
2021	$ 7,428
2022	35,003
2023	243,382
2024	334,754
2025	160,152
Thereafter	242,292
Mortgages
Debt Instrument [Line Items]
2021	7,428	[1]
2022	35,003	[1]
2023	105,879	[1]
2024	34,754	[1]
2025	160,152	[1]
Thereafter	42,292	[1]
Unsecured Credit Facility
Debt Instrument [Line Items]
2023	137,503
Unsecured Term Loans
Debt Instrument [Line Items]
2024	300,000
Thereafter	$ 200,000

[1] Includes indebtedness associated with real estate held for sale.

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Derivative Financial Instruments - Summary of Aggregate Amount and Estimated Net Fair Values of Derivative Instruments (Detail) - Cash Flow Hedge - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Derivative Instruments Gain Loss [Line Items]
Notional	$ 400,000,000	$ 400,000,000
Fair Value of Assets	1,168,000
Fair Value of Liabilities	17,492,000	29,842,000
Interest Rate Swap
Derivative Instruments Gain Loss [Line Items]
Notional	150,000,000	150,000,000
Fair Value of Liabilities	8,852,000	694,000
Interest Rate Collars
Derivative Instruments Gain Loss [Line Items]
Notional	250,000,000	250,000,000
Fair Value of Liabilities	8,640,000	13,331,000
Forward Interest Rate Swaps
Derivative Instruments Gain Loss [Line Items]
Fair Value of Assets	$ 1,168,000
Fair Value of Liabilities		$ 15,817,000

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Derivative Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2021
Derivative Instruments Gain Loss [Line Items]
Realized losses on interest rate hedges reclassified to earnings	$ 1,926	$ 4,939
Interest Rate Swap and Collars | Cash Flow Hedge
Derivative Instruments Gain Loss [Line Items]
Amount expect to be reclassified out of accumulated other comprehensive income into earnings in future		$ 9,173
Estimated time for reclassification out of accumulated other comprehensive income into earnings		12 months

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Stockholders' Equity and Noncontrolling Interests - Additional Information (Detail)								3 Months Ended						9 Months Ended
	Nov. 13, 2021 shares	Sep. 13, 2021 $ / shares	Jul. 27, 2021 Agreement $ / shares shares	Jun. 29, 2021 USD ($) shares	Jun. 14, 2021 $ / shares	Mar. 15, 2021 $ / shares	Nov. 13, 2020 USD ($) shares	Sep. 30, 2021 USD ($) $ / shares shares	Jun. 30, 2021 $ / shares shares	Mar. 31, 2021 $ / shares	Sep. 30, 2020 $ / shares shares	Jun. 30, 2020 $ / shares	Mar. 31, 2020 $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares	Jul. 26, 2021 $ / shares shares	Dec. 31, 2020 $ / shares shares	May 31, 2016 shares
Class Of Stock [Line Items]
Dividend declared per share | $ / shares								$ 0.12	$ 0.12	$ 0.12	$ 0.12	$ 0.12	$ 0.18
Dividends paid | $								$ 0						$ 278,000
At-the-market agreement to sell common shares, maximum offer price | $							$ 150,000,000
Common stock, par value | $ / shares			$ 0.01					$ 0.01						$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized			500,000,000					500,000,000						500,000,000	300,000,000	500,000,000	4,300,000
Number of IROP unites exchanged	122,155
OP Units outstanding	552,360
Common Shares
Class Of Stock [Line Items]
Issuance of common shares (in Shares)									2,932,000				3,406,000
Conversion of noncontrolling interest to common shares (in Shares)	122,155								122,155		87,148		82,357
Underwriting Agreement | BMO Capital Markets and Bank of Montreal
Class Of Stock [Line Items]
Issuance of common shares (in Shares)			16,100,000
Share price | $ / shares			$ 17.04
Underwriter's option to purchase additional shares			2,100,000
ATM Program | Forward Contracts
Class Of Stock [Line Items]
Number of shares issued				2,932,000			2,932,000
Net proceeds | $				$ 41,671,000
Forward Sale Agreement
Class Of Stock [Line Items]
Issuance of common shares (in Shares)			16,100,000											16,100,000
Share price | $ / shares								$ 17.04						$ 17.04
Number of agreements | Agreement			2
Settlement value of shares | $														$ 272,156,000
Dividend Declared
Class Of Stock [Line Items]
Declaration date		Sep. 13, 2021			Jun. 14, 2021	Mar. 15, 2021
Dividend declared per share | $ / shares		$ 0.12			$ 0.12	$ 0.12
Payment date		Oct. 22, 2021			Jul. 23, 2021	Apr. 23, 2021
Record date		Oct. 01, 2021			Jul. 02, 2021	Apr. 02, 2021
Dividend Declared | Noncontrolling Interests
Class Of Stock [Line Items]
Declaration date		Sep. 13, 2021			Jun. 14, 2021	Mar. 15, 2021
Dividend declared per share | $ / shares		$ 0.12			$ 0.12	$ 0.12
Payment date		Oct. 22, 2021			Jul. 23, 2021	Apr. 23, 2021
Record date		Oct. 01, 2021			Jul. 02, 2021	Apr. 02, 2021

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Equity Compensation Plans - Additional Information (Detail) - USD ($) $ in Thousands		1 Months Ended	9 Months Ended
	Feb. 18, 2021	May 31, 2016	Sep. 30, 2021	Sep. 30, 2020	Jul. 27, 2021	Jul. 26, 2021	Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, shares authorized		4,300,000	500,000,000		500,000,000	300,000,000	500,000,000
Expiration date of Incentive Plan			May 12, 2026
Performance Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Awards vesting period	3 years
Performance Share Units | Executive Officers
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares awarded	254,493
Restricted Stock and Performance Shares Units | Employee
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock compensation expense			$ 2,112	$ 1,667
Minimum | Performance Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation arrangement by share based payment award number share issuable percentage	0.00%
Maximum | Performance Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation arrangement by share based payment award number share issuable percentage	150.00%
Long Term Incentive Plan | Performance Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Awards performance period	3 years
Awards service period	1 year
Long Term Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Awards vesting period		2 years
Long Term Incentive Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Awards vesting period		4 years

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Equity Compensation Plans - Summary of Restricted Common Share Awards and RSU of Incentive Plan (Detail) - Restricted Stock And RSUs	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Number of Shares
Number of Shares, beginning balance | shares	406,849
Common Share awards, granted | shares	212,438
Common Share awards, vested | shares	(200,559)
Common Share awards, forfeited | shares	(29,664)
Number of Shares, ending balance | shares	389,064
Weighted Average Grant Date Fair Value Per Share
Weighted average fair value, Balance at beginning of period | $ / shares	$ 11.68
Weighted average fair value, granted | $ / shares	14.42
Weighted average fair value, vested | $ / shares	11.74
Weighted average fair value, forfeited | $ / shares	13.45
Weighted average fair value, Balance at end of period | $ / shares	$ 13.01

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Equity Compensation Plans - Summary of Restricted Common Share Awards and RSU of Incentive Plan (Parenthetical) (Detail) - shares	Sep. 30, 2021	Dec. 31, 2020
RSUs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares, outstanding	135,366	67,381

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Earnings Per Share - Reconciliation of Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Net income	$ 11,564	$ 3,407	$ 1,093	$ 1,092	$ 799	$ (374)	$ 16,064	$ 1,517
Income allocated to noncontrolling interest	(62)			(2)			(90)	(10)
Net income allocable to common shares	$ 11,502			$ 1,090			$ 15,974	$ 1,507
Weighted-average shares outstanding—Basic	104,918,674			94,456,987			102,882,723	93,261,757
Weighted-average shares outstanding—Diluted	107,668,675			95,222,623			104,062,661	94,099,091
Earnings per share—Basic	$ 0.11			$ 0.01			$ 0.16	$ 0.02
Earnings per share—Diluted	$ 0.11			$ 0.01			$ 0.15	$ 0.02

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings (loss) per share, amount	552,360	7,653,516	552,360	7,645,986