INLAND REAL ESTATE INCOME TRUST, INC. Item 2.02Results of Operations and Financial Condition
The information in Item 7.01 is incorporated by reference into this Item 2.02 and is deemed to have been furnished and shall not be deemed to be "filed" under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such act, nor shall any of such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01Regulation FD Disclosure.
Correspondence with
Furnished as Exhibit 99.1 to this Current Report, and incorporated by reference
in this Item 7.01, is the text of a correspondence, including frequently asked
questions, from
Pursuant to the rules and regulations of the
By furnishing the information contained in this Item 7.01 disclosure, including Exhibit 99.1, the Company makes no admission as to the materiality of such information.
Item 8.01Other Events.
Determination of Estimated Per Share NAV and Amendment and Restatement of Share Repurchase Program
Background and Conclusion of Estimated Per Share NAV
On
To assist the Board in establishing the Estimated Per Share NAV, the Company
engaged
The Board reviewed the Valuation Report, met telephonically with representatives
from CBRE Cap and considered the material assumptions and valuation
methodologies applied and described therein. Taking into consideration the
reasonableness of the valuation methodologies, assumptions, and the conclusions
contained in the Valuation Report, on
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count of approximately 36.0 million shares issued and outstanding as of the
Valuation Date. The Valuation Report contained a range for the Company's
Estimated Per Share NAV of
The Board's determination of the Estimated Per Share NAV was undertaken in
accordance with the Company's valuation policy and the recommendations and
methodologies of the
The Estimated Per Share NAV represents a snapshot in time, will likely change over time, and may not represent the amount a stockholder would receive now or in the future for his or her shares of the Company's common stock. Stockholders should not rely on the Estimated Per Share NAV in making a decision to buy or sell shares of our common stock. The Estimated Per Share NAV is based on a number of assumptions, estimates and data that are inherently imprecise and susceptible to uncertainty and changes in circumstances, including changes to the value of individual assets as well as changes and developments in the real estate and capital markets, for example, market changes and developments that may result from the spread and effects of the COVID-19 pandemic, and changes in interest rates. Please see "Valuation Methodologies," and "Additional Information Regarding the Valuation, Limitations of the Estimated Per Share NAV and CBRE Cap" in this Current Report, below.
The Board, including all of the Board's independent members, and not CBRE Cap, is ultimately and solely responsible for the determination of the Estimated Per Share NAV. The Company currently expects to publish an updated Estimated Per Share NAV on at least an annual basis.
Valuation Methodologies
As of the Valuation Date, the Company's real estate portfolio was comprised of 44 retail properties, totaling approximately 6.5 million square feet. The weighted average period of time that the Company has owned the properties is 5.7 years as of the Valuation Date.
To estimate our per share value, CBRE Cap utilized the "net asset value" or
"NAV" method, also known as the appraised value methodology, which is based on
the fair value of real estate, real estate related investments and all other
assets, less the fair value of total liabilities. The fair value estimate of our
real estate assets is equal to the sum of their individual real estate
values. Generally, CBRE Cap estimated the value of the Company's real estate
assets using several methodologies, including a discounted cash flow, or "DCF,"
of projected net operating income, less lease-up discounts and deferred
maintenance, as appropriate, for each property, for the ten-year period ending
The estimated value of the Company's real estate assets reflects an overall
decrease of 6.6% compared to the Company's original cost of the real estate
assets plus any capital expenditures invested in those real estate assets by the
Company through
Net asset value per share was estimated by subtracting the fair value of our total liabilities from the fair value of our total assets and dividing the result by the number of common shares outstanding as of the Valuation Date. CBRE Cap created a valuation
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range by first establishing a discount rate and terminal capitalization rate for
each real estate asset. CBRE Cap then applied a discount rate and terminal
capitalization rate sensitivity analysis by varying the discount rate and
terminal capitalization rate of each real estate asset by 2.5% in either
direction, which represents an approximate 5% sensitivity on the discount rates
and terminal capitalization rates, resulting in a value range equal to
The terminal capitalization rate and discount rate have a significant impact on the estimated value under the net asset value method. The following chart presents the impact of changes to the Estimated Per Share NAV based on variations in the terminal capitalization rate and discount rate within the range of values determined by CBRE Cap.
Range of Value and Rate
Estimated
Low Value Mid-point High
Share Price $ 17.58 $ 18.08 $ 18.58 $ 19.57
Terminal Capitalization Rate 7.34 % 7.27 % 7.18 % 6.98 %
Discount Rate 8.07 % 7.96 % 7.87 % 7.67 %
The following table summarizes the individual components presented to the Board
to estimate per share values as of the dates presented. All share information
reflects the 1-for-2.5 reverse stock split effected by the Company on
Per Share as of Per Share as of
December 31, 2020 December 31, 2019
Real Estate Assets $ 35.78 $ 38.13
Cash and Other Assets, Net of Other
Liabilities(1) (0.33 ) (0.72 )
Fair Market Value of Debt(2) (17.37 ) (19.26 )
Estimated Per Share NAV $ 18.08 $ 18.15
(1) Includes the following items based on book value: (i) cash and cash
equivalents; (ii) accounts and rent receivables; (iii) other assets; (iv)
accounts payable and accrued expenses; (v) distributions payable; (vi) due to
related parties and (vii) other liabilities
(2) Comprised of mortgage loans and credit facility payable, as adjusted for fair
market value.
The primary factors that impacted the Board's determination of the Company's
Estimated Per Share NAV as compared to the Company's prior NAV determination as
of
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
Exhibit No. Description 99.1 Correspondence toFinancial Advisors and Broker-Dealers
Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements," which are
not historical facts, within the meaning of the Private Securities Litigation
Reform Act of 1995. The statements may be identified by terminology such as
"may," "can," "would," "will," "expect," "intend," "estimate," "anticipate,"
"plan," "seek," "appear," or "believe." Such statements reflect the current view
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions related to certain factors including, without
limitation, the uncertainties related to general economic conditions, the
effects of the COVID-19 pandemic and measures taken to combat it, competition
for our tenants from internet retailers, unforeseen events affecting the
commercial real estate industry, retail real estate, or particular markets, and
other factors detailed under Risk Factors in our most recent Form 10-K as of
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