The board of Inland Real Estate Income Trust Inc., a publicly registered non-traded real estate investment trust, has declared an estimated net asset value per share of its common stock as of December 31, 2021.
The REIT’s NAV per share is $20.20 as of December 31, 2021, an increase of approximately 11.7 percent compared to the 2020 NAV per share of $18.08. Shares were originally priced at $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.
According to Inland REIT, in considering the 2021 NAV per share, the board acknowledged that the retail shopping center sector “experienced a record pace of recovery in 2021, as the world continues to emerge from the impact of the coronavirus (COVID-19) pandemic.”
In addition, on average, capitalization rates for U.S. retail shopping center transactions in 2021 were lower than the capitalization rates for the sector in 2020, resulting in higher valuations in 2021, the company said. “It remains to be seen whether these factors are a result of pent-up consumer demand or a sustainable trend.”
The REIT also noted that approximately 36 percent of its annualized base rent for leases in-place as of December 31, 2021 were generated from non-grocery big box retailers, a retail sector the board believes continues to be negatively impacted more than other retail sectors due to overall shifting consumer preferences and internet competition, an evolution that was taking place prior to the pandemic and was accelerated over the past two years.
CBRE Capital Advisors Inc., a third party firm, assisted with the valuation process and determined an NAV per share range of $19.43 to $21.48, with a midpoint of $20.45.
In light of the aforementioned factors, the board selected the $20.20 estimated NAV per share, which is lower than the mid-point of the range of values provided in CBRE Capital Advisors’ valuation report.
According to the company, the primary factors that impacted the change in the estimated NAV per share from 2020 were an increase in the value of the real estate assets due to lower terminal capitalization rates, and lower discount rates applied to certain assets and an increase in market rents at certain properties.
Other factors include an increase in cash and other assets, net of other liabilities, as a result of an increase in fair value of swaps; and a decrease in the fair market value of debt as a result of a decrease in debt from the pay down of principal.
The new purchase price for shares issued under the distribution reinvestment plan is $20.20 per share and both ordinary repurchases and repurchases for death or qualifying disability will be at $16.16 – which is 80 percent of $20.20.
As of the valuation date, the REIT’s primarily grocery-anchored portfolio was comprised of 44 shopping centers, totaling approximately 6.5 million square feet. The portfolio was 93.9 percent occupied by 708 tenants.
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.