InvenTrust Properties Corp. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; balance-sheet amounts are as of March 31, 2024. InvenTrust is a REIT focused on multi-tenant retail properties, primarily grocery-anchored centers in Sun Belt markets. It reported one operating segment.
Financial and operating performance
| Metric | Q1 2024 | Q1 2023 / prior period |
|---|---|---|
| Total income | $66.8 million | $65.2 million |
| Net income | $2.9 million; $0.04 per diluted share | $1.1 million; $0.02 per diluted share |
| Same Property NOI (non-GAAP) | $41.5 million | $39.9 million; up 4.1% |
| Core FFO per diluted share (non-GAAP) | $0.44 | $0.40 |
| Operating cash flow | $14.8 million | $16.0 million |
| Cash, cash equivalents and restricted cash | $75.1 million | $99.8 million at December 31, 2023 |
| Total debt, gross | $831.5 million | $818.5 million at December 31, 2023 |
| Total assets / stockholders’ equity | $2.476 billion / $1.548 billion | $2.487 billion / $1.554 billion at December 31, 2023 |
Lease income rose 2.6% year over year. Operating expenses increased 1.4% to $55.1 million; depreciation and amortization increased $1.4 million, while property operating costs and real estate taxes declined. Net interest expense was $9.6 million, slightly higher year over year. Net income as a share of total income was approximately 4.3%, compared with 1.7% in Q1 2023.
Portfolio occupancy at quarter-end was 93.4% economic and 96.3% leased, versus 94.0% and 96.1%, respectively, a year earlier. Annualized base rent per square foot increased to $19.61 from $19.12. On comparable leases executed during the quarter, contractual rent increased 11.2% over prior rents; the portfolio retention rate was approximately 90%.
Cash flow, debt and liquidity
- Cash used in investing was $23.7 million, including $16.5 million of net cash outflow for an acquisition and $7.2 million for capital investment and leasing costs. Financing used $15.8 million, chiefly distributions of $14.6 million. Cash declined $24.6 million during the quarter.
- Declared distributions were $0.23 per share and paid distributions were $0.22 per share. Operating cash flow approximately covered cash distributions, before capital spending and other uses.
- Gross debt was $831.5 million, at a weighted-average rate of 4.28%; debt, net of discounts and issuance costs, was $827.5 million. The $350 million revolving credit facility was undrawn. The company reported compliance with debt covenants.
- Of $472.5 million in variable-rate debt, $400 million was swapped to fixed rates; the company identified $72.5 million of variable-rate mortgage debt as its remaining interest-rate exposure. A permanent 1% rate change would affect annual interest expense by approximately $0.7 million.
- Scheduled mortgage maturities include $88.2 million in 2024 and $35.9 million in 2025. Management said it expects to use property-sale proceeds, cash on hand and available credit capacity to repay, refinance or extend near-term maturities, and believes current liquidity is adequate.
Material changes, outlook and risks
- Q1 2024 acquisition: The Plant, a 57,000-square-foot Sprouts-anchored center in Chandler, Arizona, for $29.5 million, funded with cash and $13.0 million of assumed mortgage debt. After quarter-end, on April 9, the company acquired Moores Mill, a 70,000-square-foot Publix-anchored center in Atlanta, for $28.0 million using cash on hand.
- Same Property NOI growth primarily reflected higher minimum rent and recoveries and lower non-recoverable expenses. Total lease-income growth also benefited from acquired properties.
- No specific earnings or FFO guidance was provided in the supplied filing text. Management described its strategy as investing in Sun Belt grocery-anchored and essential retail centers and said the Board will periodically review distributions.
- Key disclosed risks include rent collection and tenant bankruptcies, anchor-tenant performance, leasing competition and e-commerce shifts, acquisition and redevelopment execution, capital needs, refinancing and interest rates, inflation, severe weather and climate-related events, and maintaining REIT tax status. Management reported no material change in previously disclosed risk factors.
- Ordinary-course legal claims are disclosed; management does not expect their resolution to materially adversely affect the company. No off-balance-sheet arrangements were reported. Disclosure controls were deemed effective, and no material change in internal control was reported.
Important facts for investors to verify
- Near-term mortgage maturities and the refinancing or extension plan, particularly the $88.2 million due in 2024.
- Whether occupancy, leasing spreads and Same Property NOI trends continue, including the slight year-over-year decline in economic occupancy.
- Cash available after acquisitions, capital expenditures and distributions; Q1 operating cash flow was $14.8 million versus $14.6 million of cash distributions.
- Funding and performance of the April 2024 Moores Mill acquisition, and the company’s capacity to pursue further acquisitions.
- Non-GAAP NOI and FFO measures alongside GAAP results, and the effect of interest-rate exposure, tenant credit conditions and other disclosed risks.