IPO Report: Independence Realty Trust (IRT)

Nine other IPOs were scheduled for the week of August 5. The full IPO calendar can be found at IPOpremium.

Independence Realty Trust ($IRT) is based in Philadelphia, PA.  IRT scheduled an $42 million IPO with a market capitalization of $101 million at a price range mid-point of $10.5, for the week of August 5, 2013.

IRT filed a S-11A  July 26, 2013.  The manager and joint managers are Ladenburg Thalmann; William Blair; JMP Securities; Compass Point.  The co-managers are: National Securities; Aegis Capital; C&Co-Prince Ridge; Drexel Hamilton.

Summary

IRT has 18 apartment buildings on Arizona, Colorado, Georgia, Indiana, Texas and Virginia with a total of two thousand units.

Valuation

Annualizing the Q1 '13 funds from operations of $1.3 suggests a maximum 5.2% dividend at the price range mid-point of $10.50, with no growth except rental increases, and perhaps some acquistions.

Glossary

Conclusion

Avoid IRT on the IPO.

To put the conclusions and observations in context, the following is reorganized, edited, and summarized from the full S-1 referenced above:

Business

IRT is an externally advised by a wholly-owned subsidiary of RAIT (RAS) , a REIT that invests primarily in commercial mortgages and, to a lesser extent, apartment properties.

As of July 26, 2013, IRT owns eight apartment properties containing an aggregate of 2,004 apartment units in Arizona, Colorado, Georgia, Indiana, Texas and Virginia.

5% stockholder, pre-IPO

RAIT Financial Trust , the 'parent', $609 million market capitalization

Use of proceeds

IRT expects to net $38 million from its IPO.

IPO proceeds will be contributed the operating partnership in exchange for units of the operating partnership. $3.6 million of the net proceeds will be used to redeem all of the Series A preferred stock and all of the Series B preferred units of the operating partnership.