Independence Realty Trust to Merge With Centerspace

PHILADELPHIA, PA — Independence Realty Trust Inc. and Centerspace agreed to an all-stock merger that would create an $8.1 billion apartment landlord with more than 44,000 units, giving the Philadelphia-based REIT greater scale across Sunbelt, Midwest and Mountain West markets without increasing leverage.

Under the agreement, Centerspace shareholders will receive 3.8 IRT common shares for each Centerspace share they own. Holders of common units in Centerspace’s operating partnership will receive 3.8 common units in IRT’s operating partnership, subject to certain adjustments.

IRT expects to issue approximately 67.6 million common shares and partnership units in the transaction and assume Centerspace’s outstanding preferred units at closing.

Existing IRT stockholders would own approximately 78% of the combined company’s fully diluted equity, excluding preferred units, with Centerspace shareholders holding about 22%.

The companies expect the transaction to close as early as the end of the fourth quarter of 2026, subject to approval from shareholders of both companies, lender consents and customary closing conditions. The boards of IRT and Centerspace unanimously approved the agreement.

The combination would create a company with approximately $5 billion in equity market capitalization and $8.1 billion in enterprise value. Its 163 multifamily communities across 17 states would contain 44,354 apartments.

The deal would broaden IRT’s geographic exposure while retaining the Sunbelt as its largest market. The companies estimate 58% of pro forma net operating income would come from Sunbelt markets, compared with 27% from the Midwest and 15% from the Mountain West.

IRT expects the transaction to increase its 2027 Core funds from operations per share by approximately 5% on a leverage-neutral basis, supported in part by an estimated $24 million in annualized synergies.

Full integration is expected within 12 months after closing. The companies said additional savings could come from combining technology and operating systems across the larger portfolio.

IRT also plans to extend its apartment renovation program and Wi-Fi initiative to Centerspace properties. IRT said its value-add program has historically generated a return on investment of approximately 16%.

“We expect the added scale to compound that advantage: greater efficiency across a larger operating base, and an expanded value-add renovation program and other income initiatives across a larger platform,” IRT Chairman and Chief Executive Officer Scott Schaeffer said.

The transaction is expected to increase IRT’s market capitalization by 28% to approximately $5 billion and its free float by 27% to approximately $4.8 billion. The companies expect that expansion to increase the combined company’s weighting in the MSCI US REIT Index, FTSE NAREIT All Equity REITs Index, S&P MidCap 400 Index and related benchmarks.

The combined company expects to retain investment-grade credit ratings of BBB from S&P and Fitch. IRT also expects greater scale and trading liquidity to broaden its investor base and improve access to capital markets over time.

General and administrative costs would represent approximately 0.37% of pro forma assets, a ratio the companies said is 24% below standalone IRT and 57% below standalone Centerspace.

Centerspace President and CEO Anne Olson said its shareholders would gain exposure to a larger company with greater capital-markets access and lower leverage.

“Our complementary portfolio of high-quality Midwest and Mountain West apartment communities is located in markets experiencing accelerating migration and strong employment growth,” Olson said.

IRT’s management will lead the combined company. Schaeffer will remain chairman and CEO, while James Sebra will serve as president and chief financial officer.

IRT’s board will expand to 11 directors after closing, comprising nine IRT directors and two Centerspace directors. The company will retain the Independence Realty Trust name, its Philadelphia headquarters and the IRT ticker on the New York Stock Exchange.

IRT expects to continue paying its quarterly dividend of 18 cents per common share after the merger. Both companies plan to maintain their regular quarterly dividends until closing, with Centerspace paying a prorated stub dividend of 9 cents in the quarter when the transaction closes.

The companies expect the merger to qualify as a tax-free reorganization for U.S. federal income tax purposes.

RBC Capital Markets and Rothschild & Co. are financial advisers to IRT, with Troutman Pepper Locke LLP serving as legal adviser. BMO Capital Markets Corp. is financial adviser to Centerspace, with Wachtell, Lipton, Rosen & Katz serving as legal adviser.

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Independence Realty Trust to Merge With Centerspace

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