Independence Realty Trust: Good FFO, Bad Price Action

Independence Realty Trust looks good if you consider the steady increases in funds from operations, a highly desirable quality. 

Because that’s the case, why is their price just now coming off of 2022 lows? Shouldn’t a real estate investment trust (REIT) with decent profitability be making a series of higher highs rather than hanging out near its lows?

This is an example of the market pricing in the effects of interest rate hikes: The past is interesting, but it doesn’t matter if business conditions change as they are now. Independence Realty Trust Inc. IRT is a fine-looking REIT, but investors anticipating higher and higher rates have little interest in a rate-sensitive security — at least for now.

Independence Realty Trust’s funds from operations are up by 160.3% this year and the past five-year growth comes in at 33%. That’s the sort of performance investors typically like to see. Institutions have been interested: They own 85% of the float. Liquidity is not a concern, generally with an average daily volume of 1.93 million shares.

The REIT is paying a dividend of 2.77%, low compared to many similar companies but high enough to maintain awareness among dividend-conscious buyers.

Independence Realty’s short float is 3.79%, not yet excessively high but high enough to demonstrate that some investors consider further downside more likely.

Related: This Little Known REIT Has Produced Double-Digit Annual Returns For The Past Five Years

Here is Independence Realty Trust’s daily price chart:

Although it’s bouncing a bit off of the early September lows, the price needs to get above that red-dotted downtrend line before any sense of bullishness is present.

This is Independence Realty Trust’s weekly price chart:

The longer-term up trend from the March 2020 pandemic lows was broken in May and June 2022. From a price chart analysis standpoint, to be considered bullish again, Independence Realty Trust needs to reclaim a price above that red-dotted line.

Here’s the monthly price chart for Independence Realty Trust:

It’s been a stellar performer from early 2020 to early 2022, but note the extent of the breakdown from the peak up near 28. The relative strength indicator (RSI), below the price chart, gave a good heads up for those paying close attention.

Some analysts still like the way it looks. Jefferies Group LLC in April initiated a “buy” on Independence Realty Trust with a price target of $32 and BTIG Research in May gave the company a “buy” rating with a price target of $27.

Tuesday’s consumer price index figures will be closely analyzed as inflation measures and may affect the entire REIT sector, including Independence Realty Trust. 

Today’s Real Estate Investing News Highlights

• Colony Hills Capital launched a new offering for a 340-unit multifamily property with a 21.2% target IRR on the RealtyMogul investment platform

• The Flagship Real Estate Fund by Fundrise has acquired a townhome rental community in Charlotte, NC, for approximately $6.3 million. The Flagship Real Estate Fund has produced YTD returns of 6.9% so far in 2022. 

Find more news and real estate investment offerings on Benzinga Alternative Investments

Not investment advice. For educational purposes only.

Image by Roman Babakin on Shutterstock