Irenic Capital Management LP (“Irenic”), one of the largest actively managed shareholders of Independence Realty Trust, Inc. (“IRT” or the “Company”) (NYSE: IRT) with approximately 2% ownership, today sent the below letter to the Company’s Board of Directors (the “Board”) expressing its opposition to the proposed acquisition of Centerspace (NYSE: CSR) announced on September 9, 2026. In the letter, Irenic outlines why it believes a sale of IRT represents a superior path for shareholders, offering greater certainty of value than the proposed combination, and urges the Board to engage with any serious buyer that demonstrates interest in acquiring the Company.
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September 29, 2026
Independence Realty Trust, Inc.
1835 Market Street, Suite 2601
Philadelphia, PA 19103
Dear Members of the Board:
We are writing to you on behalf of funds managed by Irenic Capital Management LP (together with affiliates, “Irenic” or “we”) who collectively own approximately 2% of the outstanding stock of Independence Realty Trust, Inc. (“IRT” or the “Company”), making Irenic one of IRT’s largest actively managed owners.
We will put the punchline upfront. We are opposed to the potential acquisition of Centerspace announced on September 9th, 2026.1 The acquisition lacks industrial logic, runs counter to the Company’s long-stated strategy of maintaining its predominantly Sunbelt exposure, and, most importantly, is a far inferior alternative to a better course for IRT shareholders: selling IRT itself.
We believe the Company has not fully considered its strategic alternatives. Were it to conduct a full and robust strategic review, we believe there are both financial sponsors and strategic buyers who might be interested in purchasing the Company at a meaningful premium ($18 to $20 per share) to the current share price. To those potential buyers who might read this letter, we also believe that IRT’s shareholders would far prefer selling the Company today to undertaking a risky and unwise acquisition of Centerspace. We believe any offer for IRT at or above $18 per share would command substantial shareholder support, and we believe the Board should engage with any serious buyer that demonstrates interest in acquiring the business.2
Investors Clearly Believe Buying Centerspace Is a Bad Idea
The trading price of IRT makes plain investors’ view of the proposed transaction. Since the deal’s announcement, and despite IRT’s claims of 5% Core FFO per share accretion, IRT’s stock has fallen from $15.91 per share to $14.70 per share, a decline of nearly 8% during a period in which shares of IRT’s self-identified multifamily peers have fallen by less than half that amount.
Buying Centerspace Is Detrimental to Value and Impairs Growth
Combining with Centerspace is destructive to both net asset value and earnings growth. The fairness opinions in the preliminary S-4 make this clear. IRT’s own advisors value IRT at roughly $19.75 per share and Centerspace at roughly $62 per share.3 At the exchange ratio, IRT is issuing stock trading at 26% below what its advisors say IRT is worth, in order to buy Centerspace at only a 10% implied discount.
Centerspace’s advisors put its value higher, at roughly $67 per share, which would imply IRT is acquiring Centerspace at a 17% discount, still narrower than the discount on IRT’s own stock. However, we would treat that $67 figure with a high degree of skepticism given that Centerspace just ran a robust strategic review that concluded in June 2026 and failed to find a buyer for the whole company. Despite 19 parties signing confidentiality agreements, not a single one made a fully financed bid for the company.3 If Centerspace were really worth $67 per share, presumably one of those 19 parties would have been willing to buy it at or near that price.
Trading nearly 30% of our highly discounted stock for Centerspace’s (probably overvalued) stock, even before the larger strategic considerations, is imprudent capital allocation. Further, in the management projections found in the S-4, IRT expects to grow Core FFO at a 6.9% CAGR from 2027 to 2031 while Centerspace only expects to grow Core FFO at a 2.9% CAGR over the same period. Despite management’s claim on the deal announcement call that the transaction will enable the Company to “achieve better growth without changing who we are,” the numbers suggest exactly the opposite. Given Centerspace’s inferior projected growth rate, within five years the transaction’s Core FFO accretion is largely eroded – a substantial contrast to the advertised year-one accretion of 5%.
Buying Centerspace Lacks Industrial Logic & Runs Counter to the Company’s Stated Strategy
Currently, absent the acquisition of Centerspace, IRT is nearly 80% exposed to Sunbelt markets.4 Over the long term, these markets have favorable demographic and macroeconomic tailwinds. In the near term, the recent wave of new supply is beginning to ebb, and rents should start to increase. Trading this well-positioned portfolio for inferior markets in the Midwest and Mountain West makes little sense.5 Paying a premium to do so makes even less sense. Were the Company to complete the Centerspace acquisition, IRT’s non-Sunbelt exposure would double, and its Sunbelt exposure would decline from nearly 80% to less than 60%.4 Investment research analysts, generally supportive of management teams, are perplexed:
“…the transaction introduces execution risk in our view with so many smaller markets in the combined portfolio & raises the question of whether or not the CSR markets added will outperform IRT’s legacy markets over the next two years as Sunbelt markets recover.” – Wells Fargo, September 9th, 2026.
“IRT is making a sizable commitment to Denver specifically, which heretofore has been one of the worst-performing (most supply-prone) apartment markets in the U.S. Separately, from CSR’s perspective, investors will receive a healthy premium and a logical outcome to the company’s existence as a sub-scale apartment REIT, following roughly a year of exploring various strategic alternatives.” – Barclays, September 9th, 2026.
“We have a mixed view of IRT’s announcement today to merge with CSR, as the financial accretion, diversification, scale and market cap benefits are offset by lower Sunbelt exposure (at a time of potential recovery), integration risks, and the optics around acquiring CSR’s portfolio after the company terminated its strategic review in June.” – Citi, September 9th, 2026.
Moreover, the Company has consistently highlighted the benefits of its Sunbelt footprint and vowed not to dilute it.
“We have an optimal portfolio footprint across key Sunbelt markets that continue to see significant migration and job growth, and we expect to outperform during all points of market cycles.” – Scott Schaeffer, CEO. Q3 2022 earnings call, October 27th, 2022.
“I’m still a believer in the Sunbelt long-term. I think that’s where you will see above-average population and job growth. We’re coming through a bit of a rough patch here because of all the new supply, but that’s coming to an end. I believe you’ll see continued above-average growth in the Sunbelt markets. That’s where our focus will be.” – Scott Schaeffer, CEO. Q1 2024 earnings call, April 25th, 2024.
“My plan is to keep our ratio of Sunbelt exposure to Midwest exposure somewhat consistent. As you see us continue to grow in the Sunbelt over time, expect that growth in the Midwest as well to keep that ratio consistent.” – Scott Schaeffer, CEO. Q2 2025 earnings call, July 31st, 2025.
These Q2 2025 comments are particularly concerning since the public commentary is strikingly divorced from what was happening privately. Per the S-4, the Company had approached Centerspace about a potential acquisition in May 2025 – months prior to the Q2 earnings call. Less than a month after that earnings call, IRT would make the first of four successively higher offers to acquire Centerspace.
Failing to keep the Sunbelt exposure consistent, while stating your intention to do just that, is not just unwise; it undermines the investor trust necessary for IRT to earn an appropriate multiple (and competitive cost of capital) in the future.
Still more, and remarkably, even on the conference call meant to highlight the benefits of the Centerspace transaction, management admitted that its existing Sunbelt markets were likely to perform better than the markets it was buying:
“Well, we are increasing our Midwest exposure with this transaction. When you look at the results over an extended period of time, the Sunbelt has consistently outperformed. And we expect it to outperform again in the future, or going forward, I should say. We’ve come through a significant supply wave, and that has come to an end. And now the Sunbelt will be — will have much better supply-demand dynamics. Strong population job growth with limited additions to supply over the next three years to four years. That’s a great runway for above-market growth. We’re hyping the Midwest because the Midwest, first of all, we already have an exposure to the Midwest. It has performed very, very well with low volatility, and we expect it to continue to perform well with low volatility, but it will not be as dynamic as the Sunbelt going forward, in our opinion.” – Scott Schaeffer, CEO. IRT/Centerspace Merger Call, September 9th, 2026.
It is simply hard to square the above with the proposed transaction.
An Alternative Path
We believe that, unlike Centerspace, IRT would attract meaningful interest from both public and private buyers. Based on precedent multifamily transactions suggesting cap rates for assets comparable to IRT’s ranging from 5.4% to 5.8%, we believe a sale price of $18 to $20 per share is achievable – a premium of approximately 22% to 36% to IRT’s current share price – and a compelling outcome even after the $60 million Centerspace deal termination fee, equivalent to roughly $0.25 per IRT share. The fairness opinions provided to the Company and disclosed in the S-4 further support this valuation range. We believe this path would offer shareholders a superior alternative and greater certainty of value than trying to persuade the market of the merits of “New IRT.” Based on consensus growth estimates, it could take years to realize the value that we believe a sale process could deliver within months.
Although the merger agreement prohibits the Company from seeking a potential buyer, it does not prevent the Company from receiving, evaluating and ultimately recommending an inbound offer that constitutes a Superior Parent Proposal.6 In evaluating any such offer, consistent with its fiduciary duties, the Board must weigh the execution risk discussed above against the opportunity to secure a substantial premium today.
Changing course and recommending a sale of IRT instead of the Centerspace acquisition would not reflect poorly on the Board. Rather, it would demonstrate a willingness to reassess the facts, respond to clear market feedback, and act decisively in the best interests of shareholders. Moreover, a sale at $18 to $20 per share would produce a leading total shareholder return for IRT over the past one-, three- and five-year periods – the measure by which the Board’s stewardship will ultimately be judged.
Conclusion
Like many IRT shareholders, Irenic made its investment in the Company believing in both the near-term and long-term opportunity in its predominantly Sunbelt portfolio. The proposed Centerspace transaction imposes a fundamentally different proposition: own a less coherent portfolio of assets, in worse markets, with added execution risk. We have no interest in that proposition and intend to vote against the share issuance required to complete the transaction.
Our conversations with IRT shareholders indicate that others share our concerns and would welcome an alternative. We encourage the Board, not management, to conduct its own outreach to shareholders and weigh the risks of proceeding with a transaction that has met with a poor market response against the opportunity to deliver a substantial premium that reflects the compelling value of IRT’s portfolio.
Sincerely,
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Adam Katz Co-Founder, Chief Investment Officer |
Andy Dodge Co-Founder, Director of Research |
Tom Stults Managing Director |
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About Irenic
Irenic Capital Management LP is an investment management firm founded by Adam Katz and Andy Dodge. Based in New York City, Irenic works collaboratively with publicly traded companies to ensure operating activities, capital deployment and management incentives are all aligned to create value for the company and its owners. For more information about Irenic, please visit www.irenicmgmt.com.
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2 To be clear, we think IRT is worth more than $18 per share, but even $18 is a far better alternative than combining with Centerspace and effectively trading 28% of our high-quality, predominantly Sunbelt portfolio at a significant NAV discount for more Midwest and Mountain West exposure. |
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3 See: https://www.sec.gov/Archives/edgar/data/1466085/000143774926031092/irt20260826_s4.htm. Fair value estimates are based on DCF and cap rate methods. |
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4 On a Q2 2026 NOI basis. See: https://s29.q4cdn.com/320528805/files/doc_presentations/2026/Sep/09/IRT-CSR-Merger-Investor-Presentation-9-9-2026-final.pdf |
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5 More than half of Centerspace’s NOI comes from Minneapolis and Denver. IRT has itself noted that Denver is challenged with a large supply overhang: “Denver’s definitely a concessionary market that will probably continue to be so as we work through that 7.5% of supply…and doesn’t [sic] anticipate to ebb as fast as some of the other markets that we are in.” – Janice Richards, EVP of Operations. Q3 2025 earnings call, October 30th, 2025. |
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6 Per the S-4: A “Superior Parent Proposal” generally means a bona fide written Parent Takeover Proposal that involves 50% or more, rather than 20%, of the relevant IRT assets, revenues, earnings or shares and was not the result of a material breach of IRT’s no-solicitation covenant, and that the IRT Board determines in good faith, after consulting with IRT’s outside legal counsel and independent financial advisors that, if consummated, would result in a transaction more favorable to IRT stockholders than the Mergers, including any changes to the Merger Agreement proposed by CSR in response to such proposal, after considering all reasonably available legal, financial, regulatory and other aspects that the IRT Board deems relevant. |
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