Business Context and Reporting Period
InvenTrust Properties Corp., a multi-tenant retail REIT focused on grocery-anchored neighborhood centers, filed this Form 8-K on December 17, 2020. The report primarily discloses an updated estimated per share value of its common stock to assist broker-dealers with FINRA account statement reporting requirements. The valuation reflects the company's financial position as of December 1, 2020.
Key Financial Metrics and Valuation
The Board of Directors, relying on an independent valuation by Duff & Phelps, LLC, determined the following estimated per share values:
- Estimated Per Share Value (Dec 1, 2020): $2.89
- Previous Estimated Per Share Value (May 1, 2019): $3.14
- Valuation Methodology: Net Asset Value (NAV) method using discounted cash flow analysis and income capitalization approaches.
- Share Count (Fully Diluted): 718,934,723 shares
Valuation Components (Per Share as of Dec 1, 2020):
| Component | Value |
|---|---|
| Total Retail Portfolio | $3.58 |
| Total Non-Core / Investment in Unconsolidated Entities | $0.02 |
| Cash and Other Assets, net of other liabilities | $0.26 |
| Fair Value of Debt | ($0.97) |
| Total Estimated Per Share Value | $2.89 |
Key Assumptions:
- Exit Capitalization Rate: 6.45%
- Discount Rate: 7.19%
- Annual Holding Period: 10 years
Material Changes Versus Prior Period
The estimated per share value decreased by $0.25 (approximately 8.0%) from the May 1, 2019 estimate. The primary drivers for this decline include:
- Same Property Retail: A decrease of $0.19 per share, reflecting a 6.1% overall decrease in the value of real estate assets from their original purchase price plus post-acquisition capital.
- Acquisitions and Dispositions: A net negative impact of $0.13 per share.
- Non-Core Investments: A decrease of $0.03 per share.
- Cash and Other Assets: An increase of $0.10 per share.
- Debt: No change in the fair value of debt per share ($0.00 impact).
Guidance, Outlook, and Management Commentary
Dividend Increase: On December 17, 2020, the Board approved an increase in the annual cash dividend to $0.0782 per share, up from $0.0759 per share. The increased dividend is expected to be payable in April 2021 to stockholders of record on March 31, 2021.
Strategic Outlook: Management continues to execute a strategy to enhance its multi-tenant retail platform by investing in grocery-anchored centers with essential retail in Sun Belt markets.
Risks and Limitations:
- The estimated value does not represent a liquidity discount for non-listed shares or costs associated with asset sales.
- Values are subject to market fluctuations and do not guarantee the price at which shares could be sold or the proceeds from liquidation.
- Forward-looking statements are subject to risks, including the potential adverse effects of the COVID-19 pandemic on financial condition and tenant performance.
Important Facts for Investor Verification
- Verify the impact of the 6.1% decline in real estate asset values relative to purchase price on future NAV estimates.
- Confirm the timing and payment of the increased annual dividend of $0.0782 per share.
- Review the sensitivity of the valuation to changes in discount rates (range provided: $2.76 to $3.03 per share).
- Understand that the $2.89 value is an estimate for reporting purposes and does not reflect a market trading price or liquidation value.
- Monitor the company's exposure to the COVID-19 pandemic as disclosed in forward-looking statements.