IPO Preview: Independence Realty Trust

Aug. 8.13 | About: Independence Realty (IRT)

Based in Philadelphia, PA, Independence Realty Trust (NYSEMKT: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.

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

  • S-11A filed July 26, 2013
  • Manager, Joint Managers: Ladenburg Thalmann; William Blair; JMP Securities; Compass Point
  • Co-Managers: 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 acquisitions.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Independence Realty Trust

$101

3.8

-3.2

1.2

n/a

42%

American Residential Properties (NYSE:ARPI)

$569

32.1

-35.6

0.9

1.1

SCORECARD

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Grwth

mination

tary

rating

20 is perfect

2

2

1

1

C+, 6

Click to enlarge

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 (NYSE: 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 to 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.

Disclaimer: This IRT IPO report is based on a reading and analysis of IRT's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.