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Inland REIT’s NAV Declines 3.5% Year-Over-Year

Inland REIT’s NAV Declines 3.5% Year-Over-Year. Alternative investments, REIT, real estate investment trust, net asset value, NAV, Inland Real Estate Income Trust

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 $19.17 as of Dec. 31, 2023.

The REIT’s previous NAV per share was $19.86 as of Dec. 31, 2022.

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 Dec. 31, 2023.

CBRE Capital Advisors Inc., a third-party firm, assisted with the valuation process and determined an NAV per share range of $18.57 to $20.95, with a midpoint of $19.76.

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.

Inland REIT indicated that the primary factors contributing to the change in the NAV were uncertainties related to general economic conditions such as persistently high inflation and increasing interest rates; competition from internet retailers with Inland REIT’s tenants for sales revenue; unforeseen events affecting the commercial real estate industry, retail real estate, or particular markets; and other factors.

Additionally, its board considered the effects of big box retailers in the portfolio in their determination of the estimated per share NAV. Approximately 31% of Inland REIT’s annualized base rent for leases in-place as of Dec. 31, 2023, was from non-grocery big box retailers, a retail sector the board believes continues to be negatively impacted more than other retail sectors due to shifting consumer preferences and Internet competition. While leasing activity and rents on big box spaces have been generally positive, costs to backfill spaces can be expensive in addition to capital expenditures required to maintain the properties as they age. The decrease in value of the real estate assets and the uncertainties surrounding big box retailers led the board to select a NAV that is below the midpoint of the range.

As of Sept. 30, 2023, the REIT’s portfolio of 52 properties was 91.3% occupied compared to 93.5% last year. The company’s top five tenants were Kroger, T.J. Maxx/Home Goods/Marshalls, Ulta Salon, Ross Dress for Less, and Amazon/Whole Foods, comprising 14.3% of Inland REIT’s ABR.

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