Inland REIT Announces Reverse Stock Split and Other Strategic Initiatives
The board of Inland Real Estate Income Trust Inc., a publicly registered non-traded real estate investment trust, has approved a series of strategic initiatives that include implementing a 1-for-2.5 reverse stock split, transitioning to quarterly distributions, and engaging an investment banking firm to evaluate potential strategies. The company’s board and management said that the move will better position the company as it evaluates future potential strategies.
In a letter to shareholders, Inland REIT noted that a company typically performs a reverse stock split to make it more attractive to institutional and other larger investors. In a 1-for-2.5 reverse stock split, every 2.5 shares will be converted into one share.
For example, if a shareholder owns 1,000 shares, they will be converted to 400 shares, therefor increasing the value of each share. It does not affect a stockholder’s total account value, just the amount of shares owned and the per share value.
The reverse stock split is expected to take effect in January 2018 and will be reflected on a statement to each stockholder. After the reverse stock split, the number of the company’s outstanding shares will be reduced from approximately 89 million to approximately 35.6 million.
In addition, the REIT is moving from monthly to quarterly distributions, which it said is typical of publicly traded companies and also reduces processing and mailing costs. For the remainder of 2017, distributions will continue to be paid monthly, with the last monthly distribution to be paid in January 2018. Currently, the distribution rate is 6.63 percent based on the current estimated per share value of $9.05.
Next year, the board will choose a record date of the last business day of each calendar quarter, with the first quarterly distribution to be declared in March 2018 and payable in April 2018. The board is expected to declare the second quarterly distribution in June, payable in July, the third quarterly distribution in September, payable in October, and the fourth quarterly distribution in December, payable in January 2019.
The company’s share repurchase plan and distribution reinvestment plan will also move to quarterly repurchases and reinvestments next year.
Inland REIT said that it plans to engage an investment bank to assist it in exploring and evaluating potential strategies to better position the company for future growth and enhanced stockholder value.
Inland Real Estate Income Trust invests in commercial real estate located throughout the United States with a focus on core multi-tenant 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. As of the third quarter 2017, the REIT owned 59 retail properties with a total investment cost of $1.4 billion, according to Summit Investment Research.
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