InvenTrust Properties Corp. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. InvenTrust is a REIT focused on multi-tenant, grocery-anchored and necessity-based retail properties, primarily in Sun Belt markets. Financial statement amounts below are in millions unless otherwise stated.
Financial and operating results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Total income | $58.8 | $55.1 | $177.4 | $158.4 |
| Net income | $0.9 | $4.0 | $52.4 | $5.4 |
| Diluted EPS | $0.01 | $0.06 | $0.77 | $0.08 |
| Operating cash flow | — | $100.9 | $85.7 | |
| Distributions per common share | $0.21 | $0.20 | $0.62 | $0.58 |
| Core FFO per diluted share (non-GAAP) | $0.37 | $0.38 | $1.23 | $1.02 |
Nine-month net income included a $36.9 million gain from selling two properties; the comparable 2021 gain was $1.5 million. Q3 same-property NOI was $33.2 million, down 2.9%; nine-month same-property NOI was $102.7 million, up 5.3%. Pro rata same-property NOI, including InvenTrust’s share of its joint venture, was $35.8 million in Q3, down from $36.8 million.
At September 30, the company reported cash, cash equivalents and restricted cash of $216.5 million; total assets of $2.54 billion; debt, net of discounts and issuance costs, of $807.6 million; and stockholders’ equity of $1.62 billion. Gross debt was $813.3 million, compared with $537.0 million at December 31, 2021. Nine-month investing cash outflow was $81.1 million, including $156.1 million of property acquisitions and $26.7 million of capital and leasing investments, partly offset by property-sale proceeds of $54.3 million and $47.4 million of distributions from unconsolidated entities.
Portfolio, changes and material activity
- The company owned or held an interest in 62 retail properties with approximately 10.5 million square feet. Pro rata portfolio economic occupancy was 93.5%, versus 92.2% a year earlier; leased occupancy was 95.6%, versus 93.5%.
- Nine-month lease income rose $19.7 million, primarily from acquisitions and improved same-property results. Same-property minimum rent and occupancy increased, but Q3 NOI was pressured by higher property expenses and rent collections in the 2021 comparison period.
- InvenTrust acquired five properties for a gross price of $238.5 million and sold two for $55.5 million gross, recognizing $36.9 million in net gains. It issued $250 million of senior notes in August: $150 million at 5.07% due 2029 and $100 million at 5.20% due 2032.
- Debt costs and interest expense increased: nine-month net interest expense was $18.1 million versus $12.0 million. The company transitioned its credit facilities from LIBOR to Term SOFR and had $400 million of term loans, of which $300 million was effectively fixed through swaps.
- Management reported compliance with debt covenants and said current liquidity sources were sufficient for short- and long-term cash demands. The $350 million revolver matures in 2025, with two six-month extension options. The company declared and paid $41.5 million of distributions during the first nine months.
- After quarter-end, the company paid off a $24.7 million mortgage on October 6 and acquired Eastfield Village for $22.5 million on October 28.
Outlook, risks and contingencies
No quantitative earnings or operating guidance is provided in the filing. Management’s strategy is to acquire and operate grocery-anchored and essential retail centers in growing Sun Belt markets, pursue selective dispositions, and maintain a flexible capital structure. Management expects to use cash, property-sale proceeds and available credit capacity to address near-term debt maturities and states that it believes it can repay, refinance or extend debt as needed.
Key disclosed risks include rent collection and tenant financial health, leasing and occupancy, retail competition and e-commerce, acquisition and redevelopment execution, inflation and rising interest rates, and refinancing debt on acceptable terms. A permanent 1% rate move on the variable-rate debt outstanding at quarter-end was estimated to change annual interest expense by approximately $1.0 million. Ordinary-course legal claims are disclosed; management does not expect pending matters to have a material adverse effect. The joint venture had $126.0 million of mortgage debt scheduled to mature in 2023, subject to extension options; that debt is not recourse to InvenTrust. The company reported no material change to previously disclosed risk factors.
Important facts for investors to verify
- How much reported earnings growth depends on property-sale gains, and how recurring operating performance compares using FFO, Core FFO and NOI.
- Whether higher interest costs, floating-rate exposure and upcoming property and joint-venture debt maturities affect future cash available for distributions.
- Whether occupancy and leasing gains persist and offset higher property operating costs; Q3 same-property NOI declined despite nine-month growth.
- Whether acquisitions, planned capital investments and any future equity or debt financing generate returns sufficient to support distributions.
- The filing provides no explicit forward earnings guidance; confirm subsequent operating results and management updates before relying on outlook assumptions.