Good day, ladies and gentlemen and welcome to the Third Quarter 2013 Independence Realty Trust Incorporated Earnings Conference Call. My name is Towanda and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Andres Viroslav, Director of Corporate Communications. Please proceed, sir.

Thank you, Towanda and good morning to everyone. Thank you for joining us today to review Independent Realty Trust’s third quarter 2013 financial results. On the call with me today are Scott Schaeffer, IRT’s Chief Executive Officer; Jim Sebra, IRT’s Chief Financial Officer; and Farrell Ender, President of Independent Realty Advisors. This morning’s call is being webcast on our website at www.irtreit.com. There will a replay of the call available via webcast on our website and telephonically beginning at approximately 1:00 PM Eastern Time today. The dial-in for the replay is 888-286-8010 with a confirmation code of 36182789. Before I turn the call over to Scott, I would like to remind everyone that there may be forward-looking statements made in this call. These forward-looking statements reflect IRT’s current views with respect to future events and financial performance. Actual results could differ substantially and materially from what IRT has projected. Such statements are made in good faith pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Please refer to IRT’s press release and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations. Participants may discuss non-GAAP financial measures in this call. A copy of IRT’s press release containing financial information, other statistical information and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to IRT’s most recent current report on Form 8-K available at IRT’s website, www.irtreit.com under Investor Relations. IRT’s other SEC filings are also available through this link. IRT does not undertake to update forward-looking statements in this call or with respect to matters described herein, except as maybe required by the law. Now, I would like to turn the call over to IRT’s Chief Executive Officer, Scott Schaeffer. Scott?

Thanks, Andres and thank you all for joining our call today. Welcome to the inaugural IRT earnings conference call. We are pleased to report that since our August equity offering and public listing on the NYSE MKT Exchange, we have made excellent progress towards deploying the $34 million of gross offering proceeds. As of this call, we have effectively deployed or committed all of the capital raised in the offering. We have acquired one property in Indianapolis and under contract regarding our other acquisitions including an agreement to acquire portfolio of five properties located around Oklahoma City. As expected, we have sourced these acquisitions through RAIT Financial Trust commercial real estate platform and relationships. In addition, we recently entered into a $20 million secured revolving credit agreement with Huntington National Bank to be used to fund acquisitions. We continue to see solid opportunities to purchase stable apartment properties in sub-markets with strong rental demand and limited supply enhancing the potential for rent increases and improved operating efficiencies. And at this point, I would like to turn the call over to Jim Sebra to go through the numbers.

Thanks, Scott. During Q3, 2013, core FFO was $0.17 per share, up from $0.16 per share in Q3 2012. Please note that our weighted average shares outstanding were 7.6 million shares this quarter as compared to 5.6 million shares in Q3 of last year. This increase is due entirely to the 4 million shares we issued in our August public offering. Earnings per share was $0.03 per share this quarter, up from a $0.09 loss per share during Q3 of last year. A few items of note on the income statement. Revenue was up $746,000 in Q3 this year as compared to Q3 last year. This increase was primarily from improved occupancies and the acquisition of Runaway Bay in October of last year. Property operating expenses increased by $315,000 in Q3 this year due primarily to the acquisition of Runaway Bay as previously mentioned. As a result, property NOI was $2.4 million for the quarter, up $431,000 compared to Q3 of last year. Occupancy at our same store properties was 94.3% this quarter compared to 92.4% last year. The average rental rate for the same store properties was $770 per unit per month this quarter as compared to $759 per unit per month during Q3 last year. Our Heritage Trace asset continues to improve after the close last year reduced its occupancy for the first half of 2013. In order to accelerate occupancy growth at this asset we have reduced our asking rents into occupancy returns to a more stabilized level. Other expenses including asset management fees and G&A are down primarily due to the movement of our transfer agent from DST to American stock transfer in May of this year. Interest expense increased by $97,000 this quarter due to $10 million of agency financing we used to purchase Runaway Bay in October of last year. The annual coupon of that financing is 3.6%. From a balance sheet perspective we have raised $34 million to our initial listing of IRT on the New York Stock Exchange or New York – the NYSE MKT market. Acquired a 354 unit apartment property in Indianapolis for $13.25 million and ended the quarter with $17 million of liquidity to fund future acquisitions. Our leverage was 49.4% at September 30, based on debt to gross assets. As previously announced we have recently closed a $20 million acquisition line of credit with Huntington National Bank. The acquisition facility has a term of three years to provide acquisition financing up to 60% and cost us LIBOR plus 275 basis points. We expect to use this facility as short-term bridge financings for acquisitions until permanent financing – permanent financing is put in place. Lastly, IRT is paying its common dividend monthly at a quarterly rate of $0.16 per quarter. Scott, this concludes the financial review.

Thanks Jim. And at this time, I would like Farrell Ender to discuss IRT’s acquisition strategy and pipeline. Farrell?

Thanks Scott. We are focused on targeting opportunities and supply constraints in secondary markets, where we can purchase well-occupied and maintained properties below replacement costs at 6.5% to 8% cap rates. We look for stable properties that are revenue upside to increasing rental rates and the ability to improve operating efficiencies. We are also seeing very efficient debt financing for these assets in the current market. In September we purchased a 354 unit asset in Indianapolis at a 7.2% cap rate and anticipate financing the property at or below 4% producing initial return on equity of over 12%. This opportunity came from an existing relationship and allowed us to increase our presence in this market. We have recently put under contract in a currently performing due diligence on a five property portfolio containing 1600 units in Oklahoma City. The portfolio will provide a significant base in a market that we clearly like. The state’s business friendly environment and educated work force attracts diverse industries such as aerospace, aviation, bioscience in addition to the energy industry. The opportunity also came to us from an existing REIT relationship. We will acquire the Oklahoma portfolio for $65 million and assume an existing mortgage of approximately $45 million which matures in 2016. The debt comes in an above market interest rate, which is used at going in cap rate of 8.5%. The investments would generate a return on equity in excess of 10% in year one. Many of the opportunities we are seeing are coming through an external manager at REIT Financial Trust existing relationship platform which is prudent to give IRT unique access to transactions. Additionally our property manager will be a good source for deal flow as they have an extensive relationship network in 17 states in which they manage properties. Our property manager also provides us expertise in managing portfolio efficiently and delivering a quality product and experience to our tenants. The current acquisition pipeline consists of approximately 1500 units with total acquisition costs of $106 million. The properties in the pipeline are similar and tight in location to our existing portfolio on those in which we have under contract. Thanks you Scott.

Thanks Farrell. At this point operator, I would like to open up the call for questions.

Thank you. (Operator Instructions) Your first question comes from the line of Wilkes Graham with Compass Point. Please proceed.

Hi, good morning.

Good morning Wilkes.

Can we just confirm a couple of things you said, did you say that your current acquisition pipeline is $106 million?

Correct. In total acquisition cost, yes.

Okay and is that…

If we close on the entire pipeline...

I see, okay. And you said that you bought OKC portfolio at an estimated 8.5 cap rate?

We are under contract, yes.

Yes, those are closed yet. Can you talk about, I just have a couple of granular questions, one it looks like you did not pay an incentive fee, is that just related to the timing of the IPO?

It is, well.

Okay. I am curious about the occupancy decline at Runaway Bay, is there anything behind that?

We just had a concentration of lease maturities in August and September, which caused the occupancy to dip. We are now re-leasing those units, just happened that it all – it all happened in summer.

It was a referral that we inherited when we bought the property and we now have this property on the LRL system that we use, which will spread out as maturities throughout the year, lease maturities.

Okay. Alright, last question, the property operating expenses, they were just above 50% of rent in the third quarter that is an improvement of about 150 basis points over last year, but relatively high relative to the other quarters. Can you talk it all about where if there is any room for improvement on operating expenses?

Yes, we certainly look to achieve better margins on the real estate each month, each quarter going throughout the year. So we are certainly looking at additional improvements in the Runaway Bay and the new properties we acquire going forward.

Okay.

We think there will be continued improvement. It’s a process.

Sure. Just the $106 million acquisition pipeline, can you just say what your definition is of a pipeline?

They are all being underwritten and in some cases, we have mutually agreed upon prices, but nothing firm.

Okay. And is it fair to say that cap rate range the sort of the beginning of the call, 6.5 to 8 is fair for that pipeline?

Yes, I would say so.

Okay, thank you very much.

Thank you.

And your next question comes from the line of Bob Napoli with William Blair. Please proceed.

Good morning guys.

Good morning Bob.

Good morning Bob.

I mean, just one other question on occupancy rates, the Tucson Centerpoint had come down three quarters in a row, just wondered if what was going on there? What do you view as an optimal occupancy rate?

Well, I always believe that the occupancy, the best level is in the low to mid 90s. I would tell you on Centerpoint, we are pushing the rents and that’s why the occupancy has declined a little bit. If you look back to the March quarter, it was 98% which in my opinion is too high.

Yes.

That’s just an indication that the rents are too low. So as we push rents, then the occupancy will come back down to that lower to mid 90s range.

What is your feeling, I guess about rent – the ability to grow the rental rates over the next – of your properties over the next couple of years?

We expect to be able to push rents on the same-store basis of 3% to 5%. The properties that we are acquiring, we are acquiring properties, where we believe there is more upside in the rents than that, but on a same-store basis, properties that we have owned for a year or more, 3% to 5%.

Okay. Now your pipeline, I mean, generally what percentage would you say you would expect to close of that pipeline?

As much as we can with the capital that we have, seriously Bob as we know the…

It’s the $160 million.

Well, we don’t have another capital to close the whole $160 million.

Right, yes.

So we have the Oklahoma portfolio under contract. We have our line of credit. And we will close the Oklahoma City portfolio assuming the due diligence pans out and we will close more using the line. And then everyone knows that REITs are capital intensive and if we want to grow and continue to acquire, we are going to have to raise more capital.

What is your – I mean, at what level, what is the leverage ratio that you are willing to go to before you would raise capital?

65% as we are uncomfortable.

Okay.

We have maintained it at a level lower than that. I think with interest rates where they are today that I am comfortable taking it up to 65% for a multi-family portfolio of this type.

Now, you had said that the Oklahoma deal has higher debt cost that matures in 2016, is something like that I thought, did I hear that correctly?

Yes.

What is that debt cost and can you refinance it sooner?

You can, but there is yield maintenance, it was a loan originated in 2006, the interest rate is 5.6%, so as it gets closer to 16, we will look into that possibility, but I think right now, we are paying a price for that incorporates that high cost of capital – higher cost of debt.

Okay. The Oklahoma City deal with – I mean, when would you expect that to close, if assuming due diligence goes well?

It’s subject to an assumption, but we think in the next 45 days.

Okay.

Subject to the assumption means that we have to get senior lender consent for us to step into the borrower shoes as a new owner and that’s a process that can take some time. We expect with IRT being a very simple company to understand this is a listed, traded public company that we will not have problems with that process, but it still could take a little bit of time. I think the contract, if I remember it correctly the due diligence ends November 15 and then we have 30 days thereafter to close with the borrower subject to getting the approval on the loan assumption.

Okay. And then I mean essentially after you do that, I am sorry go ahead.

I was going to say sometime after November 15 and we hope before December 15.

Okay. And then I mean that you have at that point, I mean, you have I am not that – I mean, how much more can you close after that? I guess, it’s not you are pretty close to what to being fully invested?

We are pretty close. We think there is room for one more acquisition.

Okay and looking at your pipeline that would close this year that one additional probably, okay. Just a minor, there was no management fee, I know that the prior question I would ask about the incentive fee is the property management fee, was that included in the property operating expenses for the quarter or they are just – it would I mean?

That’s right. The property management fee is included in property operating expenses.

Okay.

And the Q will contain all the disclosure about how much property management fees were paid as well as asset management fees and incentive fees.

Okay. And just broadly what are you seeing in the market -- in your markets are how big of an opportunity do you feel you have to grow this business and are you seeing – what are you seeing on the pricing side, any changes and there has been a lot of volatility in interest rates and some macroeconomic noise? What is your broad feeling about the ability to grow this company and what’s going on in a multi-family market in your areas today?

I think we are seeing what we anticipated. As you can see by the pipeline and the deals that we are closing we can put the money out relatively quickly. The cap rates in the markets that we targeted are in the range that we needed. We are seeing a ton of activity to the rate relationships we anticipated. That’s majority of our deal flow. I mean, that’s the model that we set out to not get into a bidding action, a 45-day process. We have 20 people bidding on properties. It’s targeting the rate relationships and picking out properties in the markets that we like. And it’s improving I think.

Okay. So far more opportunities and you can currently fund, I guess?

Yes.

Obviously.

Bob, if I were answering that question, I would have used the word unlimited for opportunities. There is much more out there than we have shown and with additional capital we will be able to grow this company to appropriate levels.

And do you – fundamentally you have seen nothing that suggests you are not going to get the returns that you have targeted and discussed with investors?

No. I think the returns actually might be a little better.

Alright.

I mean, if you look at the one we did it. We talked about a 10% to 11% return initially and the one we did is at 12% or a little north even.

Okay, thank you.

Thank you.

Your next question comes from the line of Daniel Donlan with Ladenburg Thalmann. Please proceed.

Thank you. Good morning.

Good morning Dan.

Might be one of the few calls where the Q&A goes longer than the prepared remarks.

Well, we try to have longer prepared remarks next time.

Actually, I think they went just perfect. Just a couple of questions here, could you maybe – just to clarify the 106 pipeline, is that inclusive of the Oklahoma or is that additional to the Oklahoma portfolio?

In addition.

Okay great. And then could you maybe talk about how you outsourced that acquisition and kind of what drew you to that market into the assets?

The Oklahoma City deal was somebody relatively local that we knew and they have owned it for some time and they saw what we were doing and reached out to us and said hey we want to exit this portfolio. There is a price that we are thinking we underwrote it and agreed with them and that’s how we did it. I mean it’s pretty straight forward. The Berkshire deal was a relationship we had Cleveland. The owners of that asset were Cleveland based similar type of situation they reached out to us and said this is the only asset that family owns in Indianapolis, here is the number that they are thinking that it’s going to take to get them to sell and we came to an agreement. And that’s really how we are something did we are generating the opportunities.

Okay and then…

We are looking sorry it’s Scott again I mean we are looking at marketing deals and we will bid on some just to see what’s going on in the market but it’s not really that process takes 30 days just to bid and then you are investing final is not really the way we want to grow the portfolio.

Understood. And then just from an operating standpoint, are any of the Oklahoma assets that they are in any type of Valero system, what type of benefits do you see from tucking them underneath your umbrella and utilizing the property management company that you guys own?

They are on Yieldstar, which is a similar program to LRL, where we see opportunities on the expense side. They have a significant insurance expense, which will benefit by putting it on our blanket policy, which cuts expenses significantly. They are also New Jersey based. These are the only assets they have outside of the Northeast. So what we feel that we can run them a little bit better with attention. Again, they haven’t really pushed rents the way we are thinking to push rents in that market.

Okay understood. And then just lastly maybe for Jim how should we be thinking about the dividend trending over time is there a set payout ratio – range that you are looking at and as you get bigger you’re kind of bring that down a little bit just given that you are already pay up a pretty solid above average yield especially for an apartment REIT just kind of curious on that on a going forward basis as we look at our models?

Sure I mean I think you can basically think about it as our business grows and our cash flow grows the dividend should kind of grow accompanying that growth.

I would add to that as we are closing these acquisitions, we expect them to be very accretive to our current yield. So even looking forward through the end of the fourth quarter and end of the first quarter as we close on this pipeline and put the balance of the capital to use and draw a little bit on the acquisition line which is a very efficient low cost to funds, we should be generating additional yield and I would expect that it would result in the increasing dividend.

Okay alright. Thank you very much.

Thank you.

And with no further question, I would now like to turn the conference over to Mr. Scott Schaeffer for closing remarks.

Thanks for joining us today. We look forward to closing on these acquisitions that we spoke about and we look forward to speaking with you next quarter. Thanks.

Thank you for joining in today’s conference. That concludes the presentation. You may now disconnect and have a wonderful day.