The board of Inland Real Estate Income Trust Inc., a publicly registered, non-traded real estate investment trust, has determined an estimated net asset value per share of $18.08 as of December 31, 2020.
The REIT’s previous NAV per share was $18.15 as of December 31, 2019.
The NAV per share is based on the estimated value of the company’s assets, less the estimated value of its liabilities divided by the number of outstanding shares, all as of December 31, 2020.
CBRE Capital Advisors Inc., a third party firm, assisted with the valuation process and determined an NAV per share range of $17.58 to $19.57, with a mid-point of $18.58.
The REIT’s board selected a lower NAV per share than the mid-point “after considering the constantly changing and ongoing negative effects of COVID-19…, as well as the evolution to online shopping accelerated by the pandemic.”
Shares were originally sold for $10.00 each, but the company conducted a 1-for-2.5 reverse stock split in 2018, resulting in a final offering price of $25.00 per share.
In a recent filing with the SEC, Inland REIT indicated that the primary factors contributing to the change in the NAV were a $2.35 per share decline in the value of the retail properties due to the sale of three assets, higher terminal capitalization rates, higher discount rates applied to certain assets and a decrease in rents at certain properties.
The company also revealed a stronger balance sheet which, relative to the NAV, equates to approximately $2.28 per share with a decrease in mortgages and credit facility payable, decrease in fair market value of debt due to an increase in risk-adjusted market interest rates, and a decrease in distributions and share repurchase program payable due to the suspension of distributions and repurchases following the onset of the pandemic.
“Distributions, the distribution reinvestment plan, and the share repurchase program remain suspended,” the REIT said in the filing. “Management may consider recommending that the board revisit these important features later this year, should the new vaccines and other immunities continue to reduce the spread of COVID-19 and the businesses and prospects of our tenants that have been impacted by the pandemic trend toward returning to pre-pandemic levels.”
As of December 31 2020, the REIT’s portfolio was 93.3 percent occupied, compared to 94.4 percent last year. The company executed 36 new leases, an increase of 16 percent compared to 2019 leasing activity. More than 78 percent of tenants renewed their leases in 2020, with 91 renewals signed over the year.
“Top line same-store rental income was lower by approximately $8.5 million due to higher bad debt, lower reimbursements due to lower operating expenses, and lower rent because of pandemic-related abatements but, at the same time, we were able to lower same-store property operating expenses by approximately $3.4 million through reductions in management, landscaping, insurance, marketing and snow removal fees,” the company stated.
Inland Real Estate Income Trust, sponsored by Inland Real Estate Investment Corporation, is focused on acquiring grocery-anchored retail assets. The company commenced operations in October 2012 and closed the offering in October 2015 after raising $834.4 million, excluding proceeds from the company’s distribution reinvestment plan. Inland Income Trust owns 41 retail properties occupied by 691 tenants.