Fitch gives Independence Realty BBB

Fitch Ratings said it assigned a BBB issuer default rating to Independence Realty Trust, Inc. and BBB ratings to the company's subsidiary, Independence Realty Operating Partnership, LP and its senior unsecured debt, which includes the company's credit facility and two term loans. The outlook is stable.

“The rating reflects IRT's solid balance sheet, stable property performance and anticipated execution of its portfolio optimization plan and deleveraging strategy. This is offset to some extent by the company's historical predominantly secured financing approach and less developed capital access,” Fitch said in a press release.

IRT plans to sell 10 properties in seven states to reduce or leave these markets, while also deleveraging its balance sheet. IRT completed four of these dispositions in 4Q23 for a total gross sales price of about $201 million. It sold two more in February, with the remaining sales expected to be closed in the first quarter of 2024. In sum, these property sales are expected to raise about $525 million of capital, which Fitch said it expects to be used to pay down debt.

“Fitch calculates REIT leverage (net debt to recurring operating EBITDA for 2023 of 6.7x, which includes the beginning of the Optimization program 4Q23 sales, which is modestly down from 7.1x REIT leverage for 2022. Fitch expects further delevering to occur into the forecast period as the company completes its disposition program, pays down debt with the proceeds and continues to generate positive organic growth with an expectation of REIT leverage sustaining below the 6x level by the end of the forecast period,” the agency said.

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