Business Context and Reporting Period
This Form 8-K filing by InvenTrust Properties Corp. (the "Company") is dated May 6, 2016, with the report date of May 9, 2016. The filing discloses an estimated value per share of the Company's common stock to assist broker-dealers in complying with Financial Industry Regulatory Authority (FINRA) account statement reporting rules. The valuation is based on a Net Asset Value (NAV) methodology as of May 1, 2016, conducted by independent third-party advisor Real Globe Advisors, LLC.
Key Financial Metrics and Valuation Components
The Board of Directors determined an estimated per share value of $3.14 as of May 1, 2016. This figure is derived from the fair value of assets less liabilities, adjusted for estimated transaction costs related to the sale of the student housing platform and certain non-strategic properties.
| Component | Per Share Value |
|---|---|
| Real Properties | $4.51 |
| Joint Ventures and Land Held for Developments | $0.28 |
| Marketable Securities | $0.23 |
| Cash and Other Assets, Net of Other Liabilities | $0.15 |
| Fair Value of Debt | ($1.89) |
| Estimated Value Before Transaction Costs | $3.28 |
| Less: Student Housing Platform Transaction Costs | ($0.10) |
| Less: Non-Strategic Property Transaction Costs | ($0.04) |
| Company Estimated Per Share Value | $3.14 |
The valuation utilized a weighted average exit capitalization rate of 6.40% and a discount rate of 7.74%. The number of common shares outstanding on a fully diluted basis was 862,205,672.
Material Changes Versus Prior Period
The estimated per share value decreased from $4.00 as of February 4, 2015, to $3.14 as of May 1, 2016. Key drivers for this change include:
- Spin-off of Highlands REIT, Inc.: Contributed a decrease of $0.36 per share.
- Non-Strategic Retail Dispositions: Contributed a decrease of $0.25 per share.
- Corporate Debt: Contributed a decrease of $0.44 per share.
- Strategic Retail Acquisitions: Contributed an increase of $0.55 per share.
- Student Housing Platform: The disposition of this platform and associated transaction costs reduced value by $0.10 per share.
Guidance, Outlook, and Risks
Strategic Outlook: Following the spin-off of Highlands REIT and the disposition of the student housing platform, the Company intends to focus on being a pure-play multi-tenant retail platform. The strategy involves acquiring open-air assets in key growth markets and disposing of non-strategic properties in low-growth markets.
Risks and Limitations:
- The estimated value does not represent the price at which shares would trade on a national securities exchange or the amount a stockholder would receive upon liquidation.
- The valuation does not reflect a liquidity discount for the fact that shares are not currently traded on a national exchange.
- There are no assurances that estimated transaction fees, closing costs, and contingencies will be incurred at the levels estimated.
- Real estate values are subject to market fluctuations and may change in the future.
Important Facts for Investor Verification
- Verify the final transaction costs and closing costs associated with the sale of the student housing platform and non-strategic properties, as these were estimated deductions.
- Confirm the Company's progress in executing its strategy to become a pure-play multi-tenant retail platform.
- Monitor the fair value of the Company's debt obligations, which were estimated using a weighted average effective interest rate of 4.37%.
- Note that the estimated value of $3.14 is a point-in-time calculation and does not guarantee future share prices or liquidation proceeds.