# InvenTrust Properties Corp.: Form 10-Q for the period ended Sep 30, 2024

- Company: [InvenTrust Properties Corp.](/companies/ivt.md) (CIK 1307748)
- Form: 10-Q
- Filed: 2024-10-29
- Accepted by EDGAR: Oct 29, 2024, 16:15 ET
- Period: 2024-09-30
- Accession: 0001307748-24-000101
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1307748/000130774824000101/ivt-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1307748/000130774824000101/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$12.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$30.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $9.5m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $28.7m | us-gaap:InterestExpenseNonoperating |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$539.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $3.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 68,526,238 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 68,659,319 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $99.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 9 months, 2024-01-01 to 2024-09-30 | $45.3m | us-gaap:PaymentsOfDividends |
| Total assets | at 2024-09-30 | $2.62bn | us-gaap:Assets |
| Total liabilities | at 2024-09-30 | $865.3m | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $740.1m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2024-09-30 | $1.76bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,345 characters.

Certain statements in this "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (this "Quarterly Report"), other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). These statements include statements about InvenTrust Properties Corp.'s (the "Company," "InvenTrust," "we," "our," or "us") plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events; and they involve known and unknown risks that are difficult to predict.

As a result, our actual financial results, performance, achievements, or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance," "predict," "potential," "continue," "likely," "will," "would," "illustrative," and "should" and variations of these terms and similar expressions, or the negatives of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while we consider reasonable based on our knowledge and understanding of the business and industry, are inherently uncertain. These statements are expressed in good faith and are not guarantees of future performance or results. Our actual results could differ materially from those expressed in the forward-looking statements and readers should not rely on forward-looking statements in making investment decisions.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report. Such risks, uncertainties and other important factors, include, among others, the risks, uncertainties and factors set forth in our filings with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2023 (the "Annual Report"), and as updated in this Quarterly Report and other quarterly and current reports, which are on file with the SEC and are available at the SEC's website (www.sec.gov).

Our operations are subject to a number of risks and uncertainties including, but not limited to:

- our ability to collect rent from tenants or to rent space on favorable terms or at all;
- declaration of bankruptcy by our retail tenants;
- the economic success and viability of our anchor retail tenants;
- our ability to identify, execute and complete acquisition opportunities and to integrate and successfully operate any retail properties acquired in the future and manage the risks associated with such retail properties;
- our ability to manage the risks of expanding, developing or redeveloping our retail properties;
- loss of members of our senior management team or other key personnel;
- changes in the competitive environment in the leasing market and any other market in which we operate;
- shifts in consumer retail shopping from brick and mortar stores to e-commerce;
- the impact of leasing and capital expenditures to improve our retail properties to retain and attract tenants;
- our ability to refinance or repay maturing debt or to obtain new or additional financing on attractive terms;
- the impact on our business and financial condition of incurring additional debt or issuing new debt or equity securities in the future;
- future increases in interest rates;
- rising inflation;
- natural or man-made disasters, severe weather and climate-related events, such as earthquakes, tsunamis, tornadoes, hurricanes, droughts, blizzards, hailstorms, floods, wildfires, mudslides, oil spills, nuclear incidents, and outbreaks of pandemics or contagious diseases, or fear of such outbreaks;
- our status as a real estate investment trust ("REIT") for federal tax purposes; and
- changes in federal, state or local tax law, including legislative, administrative, regulatory or other actions affecting REITs.

These factors are not necessarily all of the important factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our business, financial condition, results of operations, cash flows and overall value.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements are only as of the date they are made; we do not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information, future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes included in this Quarterly Report. All square feet and dollar amounts are stated in thousands, except per share amounts and per square foot metrics, unless otherwise noted.

### Overview

#### Strategy and Outlook

InvenTrust Properties Corp. is a premier Sun Belt, multi-tenant essential retail REIT that owns, leases, redevelops, acquires, and manages grocery-anchored neighborhood and community centers, as well as high-quality power centers that often have a grocery component. We pursue our business strategy by acquiring retail properties in Sun Belt markets, opportunistically disposing of retail properties, maintaining a flexible capital structure, and enhancing our environmental, social and governance practices and standards.

InvenTrust focuses on Sun Belt markets with favorable demographics, including above average growth in population, employment, income and education levels. We believe these conditions create favorable demand characteristics for grocery-anchored and necessity-based essential retail centers, which will position us to capitalize on potential future rent increases while benefiting from sustained occupancy at our centers. Our strategically located regional field offices are within a two-hour drive of over 95% of our properties which affords us the ability to respond to the needs of our tenants and provides us with in-depth local market knowledge. We believe that our Sun Belt portfolio of high quality grocery-anchored assets is a distinct differentiator for us in the marketplace.

#### Evaluation of Financial Condition

In addition to measures of operating performance determined in accordance with U.S. generally accepted accounting principles ("GAAP"), management evaluates our financial condition and operating performance by focusing on the following financial and nonfinancial indicators, discussed in further detail herein:

- Net Operating Income ("NOI") and Same Property NOI, supplemental non-GAAP measures;
- Nareit Funds From Operations ("Nareit FFO") Applicable to Common Shares and Dilutive Securities, a supplemental non-GAAP measure;
- Core Funds From Operations ("Core FFO") Applicable to Common Shares and Dilutive Securities, a supplemental non-GAAP measure;
- Economic and leased occupancy and rental rates;
- Leasing activity and lease rollover;
- Operating expense levels and trends;
- General and administrative expense levels and trends;
- Debt maturities and leverage ratios; and
- Liquidity levels.

### Recent Developments

On August 6, 2024, the Company acquired Scottsdale North Marketplace, a 66,000 square foot neighborhood center anchored by AJ’s Fine Foods, in Scottsdale, Arizona, for a gross acquisition price of $23.0 million. The Company used cash on hand to fund the acquisition.

On September 25, 2024, the Company completed an underwritten public offering of its common stock at a price to the public of $28.00 per share. The Company issued and sold 9,200,000 shares of its common stock, including 1,200,000 shares issued in connection with the full exercise of the underwriters' over-allotment option. The Company received $247.3 million of net proceeds, after deducting $10.3 million in underwriting discounts and commissions.

On September 27, 2024, the Company extinguished the $72.5 million pooled mortgage payable secured by Cyfair Town Center, Bay Colony, and Stables Town Center.

### Our Retail Portfolio

Our wholly-owned and managed retail properties include grocery-anchored community and neighborhood centers and power centers, including those classified as necessity-based, as defined in our Annual Report. As of September 30, 2024, we owned 65 retail properties with a total gross leasable area ("GLA") of approximately 10.6 million square feet. The following table summarizes our retail portfolio as of September 30, 2024 and 2023.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| No. of properties | 65 | 62 |
| GLA (square feet) | 10,550 | 10,324 |
| Economic occupancy (a) | 94.2% | 92.6% |
| Leased occupancy (b) | 97.0% | 95.1% |
| ABR PSF (c) | $19.83 | $19.36 |

(a) Economic occupancy is defined as the percentage of occupied GLA divided by total GLA (excluding Specialty Leases) for which a tenant is obligated to pay rent under the terms of its lease agreement as of the rent commencement date, regardless of the actual use or occupancy by that tenant of the area being leased. Actual use may be less than economic occupancy. Specialty Leases represent small shop and anchor leases with terms of less than one year and all common area leases regardless of term.

(b) Leased occupancy is defined as economic occupancy plus the percentage of signed but not yet commenced GLA divided by total GLA.

(c) Annualized Base Rent ("ABR") is computed as base rent for the period multiplied by twelve months. Base rent is inclusive of ground rent and any abatement concessions, but excludes Specialty Lease rent. ABR per square foot ("PSF") is computed as ABR divided by the occupied square footage as of the end of the period.

#### Summary by Center Type

The following table summarizes our retail portfolio by center type, as defined in our Annual Report, as of September 30, 2024 and 2023.

|  | Community and Neighborhood centers 2024 | 2023 | Power centers 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| No. of properties | 53 | 50 | 12 | 12 |
| GLA (square feet) | 7,025 | 6,800 | 3,525 | 3,524 |
| Economic occupancy | 95.6% | 93.5% | 91.3% | 90.7% |
| Leased occupancy | 97.0% | 96.5% | 96.8% | 92.4% |
| ABR PSF | $20.54 | $20.14 | $18.34 | $17.80 |

19

#### Summary by Same Property

Properties classified as same property were owned for the entirety of both periods presented ("Same Properties"). The following table summarizes the Same Properties of our retail portfolio for the three and nine months ended September 30, 2024 and 2023.

|  | Three months ended September 30 2024 | 2023 | Nine months ended September 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| No. of properties | 62 | 62 | 57 | 57 |
| GLA (square feet) | 10,324 | 10,324 | 9,109 | 9,108 |
| Economic occupancy | 94.1% | 92.6% | 94.3% | 92.8% |
| Leased occupancy | 96.9% | 95.1% | 97.2% | 95.3% |
| ABR PSF | $19.69 | $19.36 | $20.15 | $19.78 |

#### Lease Expirations

The following table presents the lease expirations of our retail portfolio as of September 30, 2024. This table does not include expirations of signed but not yet commenced leases, nor does it assume that unexercised contractual lease renewal or extension options contained in our leases will, in fact, be exercised.

| Lease Expiration Year | No. of Expiring Leases | GLA of Expiring Leases (square feet) | Percent of Total GLA of Expiring Leases | ABR of Expiring Leases | Percent of Total ABR | Expiring ABR PSF (a) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| 2024 | 18 | 39 | 0.4% | $1,213 | 0.6% | $31.10 |
| 2025 | 148 | 808 | 8.1% | 14,424 | 6.9% | 17.85 |
| 2026 | 218 | 941 | 9.5% | 22,478 | 10.7% | 23.89 |
| 2027 | 280 | 1,932 | 19.5% | 39,907 | 18.8% | 20.66 |
| 2028 | 231 | 1,061 | 10.7% | 26,018 | 12.4% | 24.52 |
| 2029 | 217 | 1,421 | 14.3% | 30,547 | 14.5% | 21.50 |
| 2030 | 106 | 756 | 7.6% | 16,232 | 7.7% | 21.47 |
| 2031 | 83 | 571 | 5.7% | 11,949 | 5.7% | 20.93 |
| 2032 | 88 | 538 | 5.4% | 12,245 | 5.8% | 22.76 |
| 2033 | 62 | 390 | 3.9% | 10,045 | 4.8% | 25.76 |
| Thereafter | 104 | 1,468 | 14.8% | 25,119 | 11.9% | 17.11 |
| Other (b) | 6 | 11 | 0.1% | 362 | 0.2% | 32.91 |
|  | 1,561 | 9,936 | 100% | $210,539 | 100% | $21.19 |

(a) Expiring ABR PSF reflects ABR PSF at the time of lease expiration.

(b) Other lease expirations include the GLA, ABR and ABR PSF of month-to-month leases.

Our retail business is neither highly dependent on specific retailers nor subject to lease roll-over concentration. We believe this minimizes risk to our retail portfolio from significant revenue variances over time.

#### Leasing Activity, Retail Portfolio

The following tables summarize the activity for leases that were executed during the nine months ended September 30, 2024, compared with expiring or expired leases for the same or previous tenant for renewals, and the same unit for new leases at the 65 properties in the retail portfolio. The Company's retail portfolio had GLA totaling 932 thousand square feet expiring during the nine months ended September 30, 2024, of which 868 thousand square feet was re-leased to the in-place tenant. This achieved a retention rate of approximately 93%.

| All Tenants | No. of Leases Executed | GLA SF (in thousands) | New Contractual Rent ($PSF) (b) | Prior Contractual Rent ($PSF) (b) | % Change over Prior Lease Rent (b) | Weighted Average Lease Term (Years) | Tenant Improvement Allowance ($PSF) | Lease Commissions ($PSF) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Comparable Renewal Leases (a) | 112 | 810 | $20.87 | $19.03 | 9.7% | 5.4 | $0.05 | $— |
| Comparable New Leases (a) | 19 | 88 | $26.87 | $23.31 | 15.3% | 10.2 | $31.80 | $12.78 |
| Non-Comparable Renewal and New Leases | 29 | 196 | $17.33 | N/A | N/A | 7.6 | $13.29 | $7.43 |
| Total | 160 | 1,094 | $21.46 | $19.44 | 10.4% | 6.2 | $4.97 | $2.36 |
| Anchor Tenants (leases ten thousand square feet and over) |  |  |  |  |  |  |  |  |
| Comparable Renewal Leases (a) | 20 | 583 | $14.08 | $12.98 | 8.5% | 5.4 | $— | $— |
| Comparable New Leases (a) | 2 | 42 | $14.67 | $12.54 | 17.0% | 10.9 | $30.00 | $8.66 |
| Non-Comparable Renewal and New Leases | 5 | 141 | $10.92 | N/A | N/A | 7.6 | $10.89 | $5.86 |
| Total | 27 | 766 | $14.12 | $12.95 | 9.0% | 6.1 | $3.66 | $1.56 |
| Small Shop Tenants (leases under ten thousand square feet) |  |  |  |  |  |  |  |  |
| Comparable Renewal Leases (a) | 92 | 227 | $38.32 | $34.57 | 10.8% | 5.3 | $0.18 | $— |
| Comparable New Leases (a) | 17 | 46 | $38.16 | $33.32 | 14.5% | 9.5 | $33.46 | $16.58 |
| Non-Comparable Renewal and New Leases | 24 | 55 | $33.73 | N/A | N/A | 7.7 | $19.43 | $11.44 |
| Total | 133 | 328 | $38.29 | $34.36 | 11.4% | 6.3 | $8.05 | $4.23 |

(a) Comparable leases are leases that meet all of the following criteria: terms greater than or equal to one year, unit was vacant less than one year prior to executed lease, square footage of unit remains unchanged or within 10% of prior unit square footage, and has a rent structure consistent with the previous tenant.

(b) Non-comparable leases are not included in totals.

### Results of Operations

### Comparison of results for the three and nine months ended September 30, 2024 and 2023

We generate substantially all of our earnings from property operations. Since January 1, 2023, we have acquired eight retail properties and disposed of one.

The following table presents the changes in our income for the three and nine months ended September 30, 2024 and 2023.

| Income | Three months ended September 30 2024 | 2023 | Increase | Nine months ended September 30 2024 | 2023 | Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Lease income, net | $68,132 | $63,716 | $4,416 | $201,681 | $192,814 | $8,867 |
| Other property income | 389 | 346 | 43 | 1,061 | 1,060 | 1 |
| Other fee income | — | — | — | — | 80 | (80) |
| Total income | $68,521 | $64,062 | $4,459 | $202,742 | $193,954 | $8,788 |

Lease income, net, for the three months ended September 30, 2024 increased $4.4 million when compared to the same period in 2023, as a result of increases from properties acquired of $1.8 million, decreases from properties disposed of $0.2 million, and the following activity related to our Same Properties:

- $1.3 million of increased minimum base rent attributable to increased occupancy and ABR PSF,
- $0.7 million of increased common area maintenance and real estate tax recoveries,
- $0.7 million of net changes in credit losses and related reversal, and
- $0.1 million of net increases in all other lease income.

Lease income, net, for the nine months ended September 30, 2024 increased $8.9 million when compared to the same period in 2023, as a result of increases from properties acquired of $6.0 million, decreases from properties disposed of $0.8 million, and the following activity related to our Same Properties:

- $2.6 million of increased minimum base rent attributable to increased occupancy and ABR PSF,
- $1.3 million of increased common area maintenance and real estate tax recoveries, and
- $0.3 million of net changes in credit losses and related reversals, partially offset by:
- $0.5 million of decreased amortization of market lease intangibles.

The following table presents the changes in our operating expenses for the three and nine months ended September 30, 2024 and 2023.

| Operating expenses | Three months ended September 30 2024 | 2023 | Increase (Decrease) | Nine months ended September 30 2024 | 2023 | Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Depreciation and amortization | $28,134 | $30,318 | $(2,184) | $85,092 | $85,339 | $(247) |
| Property operating | 10,795 | 11,070 | (275) | 31,037 | 31,056 | (19) |
| Real estate taxes | 9,205 | 8,781 | 424 | 27,232 | 27,361 | (129) |
| General and administrative | 8,133 | 7,610 | 523 | 24,768 | 23,389 | 1,379 |
| Total operating expenses | $56,267 | $57,779 | $(1,512) | $168,129 | $167,145 | $984 |

Depreciation and amortization for the three months ended September 30, 2024 decreased $2.2 million when compared to the same period in 2023, as a result of:

- $3.5 million of net decreased depreciation and amortization from our Same Properties, partially offset by:
- $1.3 million of increases from properties acquired.

Depreciation and amortization for the nine months ended September 30, 2024 decreased $0.2 million when compared to the same period in 2023, as a result of:

- $3.6 million of net decreased depreciation and amortization from our Same Properties, and
- $0.2 million of decreases from properties disposed, partially offset by:
- $3.6 million of increases from properties acquired.

Real estate taxes for the three months ended September 30, 2024 increased $0.4 million when compared to the same period in 2023, as a result of increased real estate taxes from properties acquired and real estate taxes from our Same Properties.

Real estate taxes for the nine months ended September 30, 2024 decreased $0.1 million when compared to the same period in 2023, as a result of a decrease of $0.3 million of real estate taxes from our Same Properties attributable to appeals, partially offset by $0.2 million of increases from properties acquired.

General and administrative expenses for the three months ended September 30, 2024 increased $0.5 million when compared to the same period in 2023, as a result of $0.2 million of increased stock-based compensation expense, $0.2 million of increased other compensation costs, and $0.1 million of increased legal and professional fees.

General and administrative expenses for the nine months ended September 30, 2024 increased $1.4 million when compared to the same period in 2023, as a result of $0.6 million of increased stock-based compensation expense, and $0.8 million of increased other compensation costs.

The following table presents the changes in our other income and expenses for the three and nine months ended September 30, 2024 and 2023.

| Other (expense) income | Three months ended September 30 2024 | 2023 | Change | Nine months ended September 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense, net | $(9,470) | $(9,555) | $85 | $(28,744) | $(28,441) | $(303) |
| Impairment of real estate assets | (3,854) | — | (3,854) | (3,854) | — | (3,854) |
| Gain on sale of investment properties | 334 | 1,707 | (1,373) | 334 | 2,691 | (2,357) |
| Equity in earnings (losses) of unconsolidated entities | — | 67 | (67) | — | (447) | 447 |
| Other income and expense, net | 197 | 676 | (479) | 1,510 | 1,767 | (257) |
| Total other (expense) income, net | $(12,793) | $(7,105) | $(5,688) | $(30,754) | $(24,430) | $(6,324) |

Interest expense, net, for the three months ended September 30, 2024 decreased $0.1 million when compared to the same period in 2023, primarily as a result of decreased amortization of issuance costs of $0.6 million, partially offset by increased interest expense of $0.5 million related to the $72.5 million pooled mortgage payable assumed from our former unconsolidated joint venture, IAGM Retail Fund I, LLC ("IAGM"), which was extinguished on September 27, 2024.

Interest expense, net, for the nine months ended September 30, 2024 increased $0.3 million when compared to the same period in 2023, primarily as a result of:

- increased interest expense of $1.9 million related to the $72.5 million pooled mortgage payable assumed from IAGM,
- increased interest expense of $0.3 million related to assuming a $13.0 million mortgage payable on February 1, 2024, partially offset by:
- decreased amortization of issuance costs of $1.5 million,
- decreased interest expense of $0.3 million related to the aggregate reduction of mortgages payable of $29.4 million since January 1, 2023, and
- decreased interest rates on our corporate term loans generating increased interest expense of $0.1 million.

During the three months ended September 30, 2024, the Company recorded an impairment of real estate assets of $3.85 million on one retail property after receiving and accepting a letter of intent to purchase the property for less than its carrying value.

### Net Operating Income

We evaluate the performance of our retail properties based on NOI, which excludes general and administrative expenses, depreciation and amortization, other income and expense, net, impairment of real estate assets, gains (losses) from sales of properties, gains (losses) on extinguishment of debt, interest expense, net, equity in earnings (losses) from unconsolidated entities, lease termination income and expense, and GAAP rent adjustments such as amortization of market lease intangibles, amortization of lease incentives, and straight-line rent adjustments ("GAAP Rent Adjustments"). We bifurcate NOI into Same Property NOI and NOI from other investment properties based on whether the retail properties meet our Same Property criteria. NOI from other investment properties includes adjustments for the Company's captive insurance company.

We believe the supplemental non-GAAP financial measure of NOI, and the bifurcation into same property NOI and NOI from other investment properties, provides added comparability across periods when evaluating our financial condition and operating performance that is not readily apparent from "Operating income" or "Net income" in accordance with GAAP.

#### Comparison of Same Property results for the three and nine months ended September 30, 2024 and 2023

A total of 62 and 57 retail properties met our Same Property criteria for the three and nine months ended September 30, 2024 and 2023, respectively. The following table presents the reconciliation of net income or loss, the most directly comparable GAAP measure, to NOI and Same Property NOI for the three and nine months ended September 30, 2024 and 2023:

|  | Three months ended September 30 2024 | 2023 | Nine months ended September 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net (loss) income | $(539) | $(822) | $3,859 | $2,379 |
| Adjustments to reconcile to non-GAAP metrics: |  |  |  |  |
| Other income and expense, net | (197) | (676) | (1,510) | (1,767) |
| Equity in (earnings) losses of unconsolidated entities | — | (67) | — | 447 |
| Interest expense, net | 9,470 | 9,555 | 28,744 | 28,441 |
| Gain on sale of investment properties | (334) | (1,707) | (334) | (2,691) |
| Impairment of real estate assets | 3,854 | — | 3,854 | — |
| Depreciation and amortization | 28,134 | 30,318 | 85,092 | 85,339 |
| General and administrative | 8,133 | 7,610 | 24,768 | 23,389 |
| Other fee income | — | — | — | (80) |
| Adjustments to NOI (a) | (1,626) | (1,434) | (6,056) | (6,028) |
| NOI | 46,895 | 42,777 | 138,417 | 129,429 |
| NOI from other investment properties (b) | (1,384) | (57) | (14,629) | (10,665) |
| Same Property NOI | $45,511 | $42,720 | $123,788 | $118,764 |

(a) Adjustments to NOI include lease termination income and expense and GAAP Rent Adjustments.

(b) The NOI of Maguire Groves is reflected as a component of NOI from other investment properties.

#### Comparison of the components of Same Property NOI for the three months ended September 30, 2024 and 2023

|  | Three months ended September 30 2024 | 2023 | Change | Variance |
| --- | ---: | ---: | ---: | ---: |
| Minimum base rent | $42,809 | $41,481 | $1,328 | 3.2% |
| Real estate tax recoveries | 8,214 | 7,798 | 416 | 5.3% |
| Common area maintenance, insurance, and other recoveries | 8,212 | 7,885 | 327 | 4.1% |
| Ground rent income | 4,715 | 4,762 | (47) | (1.0)% |
| Short-term and other lease income | 799 | 691 | 108 | 15.6% |
| Reversal of (provision for) uncollectible billed rent and recoveries, net | 162 | (491) | 653 | (133.0)% |
| Other property income | 374 | 346 | 28 | 8.1% |
|  | 65,285 | 62,472 | 2,813 | 4.5% |
| Property operating | 10,691 | 10,981 | (290) | (2.6)% |
| Real estate taxes | 9,083 | 8,771 | 312 | 3.6% |
|  | 19,774 | 19,752 | 22 | 0.1% |
| Same Property NOI | $45,511 | $42,720 | $2,791 | 6.5% |

Same Property NOI increased by $2.8 million, or 6.5%, when comparing the three months ended September 30, 2024 to the same period in 2023, and was primarily a result of increased ABR PSF, favorable lease spreads, and leases with advantageous fixed recovery terms.

#### Comparison of the components of Same Property NOI for the nine months ended September 30, 2024 and 2023

|  | Nine months ended September 30 2024 | 2023 | Change | Variance |
| --- | ---: | ---: | ---: | ---: |
| Minimum base rent | $116,321 | $113,761 | $2,560 | 2.3% |
| Real estate tax recoveries | 22,886 | 22,749 | 137 | 0.6% |
| Common area maintenance, insurance, and other recoveries | 21,924 | 20,746 | 1,178 | 5.7% |
| Ground rent income | 11,634 | 11,735 | (101) | (0.9)% |
| Short-term and other lease income | 2,706 | 2,575 | 131 | 5.1% |
| Provision for uncollectible billed rent and recoveries, net | (55) | (366) | 311 | (85.0)% |
| Other property income | 936 | 978 | (42) | (4.3)% |
|  | 176,352 | 172,178 | 4,174 | 2.4% |
| Property operating | 27,518 | 28,072 | (554) | (2.0)% |
| Real estate taxes | 25,046 | 25,342 | (296) | (1.2)% |
|  | 52,564 | 53,414 | (850) | (1.6)% |
| Same Property NOI | $123,788 | $118,764 | $5,024 | 4.2% |

Same Property NOI increased by $5.0 million, or 4.2%, when comparing the nine months ended September 30, 2024 to the same period in 2023, and was primarily a result of increased ABR PSF, favorable lease spreads, leases with advantageous fixed recovery terms, and successful real estate tax appeals.

### Funds From Operations

The National Association of Real Estate Investment Trusts ("Nareit"), an industry trade group, has promulgated a widely accepted non-GAAP financial measure of operating performance known as Funds From Operations ("FFO"). Our Nareit FFO is net income (or loss) in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property. Adjustments for IAGM are calculated to reflect our proportionate share of the joint venture's funds from operations on the same basis.

Core FFO is an additional supplemental non-GAAP financial measure of our operating performance. In particular, Core FFO provides an additional measure to compare the operating performance of different REITs without having to account for certain remaining amortization assumptions within Nareit FFO and other unique revenue and expense items, which some may consider not pertinent to measuring a particular company's on-going operating performance. In that regard, we use Core FFO as an input to our compensation plan to determine cash bonuses and measure the achievement of certain performance-based equity awards.

See our Annual Report for expanded descriptions of Nareit FFO and Core FFO.

Nareit FFO Applicable to Common Shares and Dilutive Securities and Core FFO Applicable to Common Shares and Dilutive Securities is calculated as follows:

|  | Three months ended September 30 2024 | 2023 | Nine months ended September 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net (loss) income | $(539) | $(822) | $3,859 | $2,379 |
| Depreciation and amortization of real estate assets | 27,923 | 30,094 | 84,439 | 84,714 |
| Impairment of real estate assets | 3,854 | — | 3,854 | — |
| Gain on sale of investment properties | (334) | (1,707) | (334) | (2,691) |
| Unconsolidated joint venture adjustments (a) | — | — | — | 342 |
| Nareit FFO Applicable to Common Shares and Dilutive Securities | 30,904 | 27,565 | 91,818 | 84,744 |
| Amortization of market lease intangibles and inducements, net | (831) | (629) | (2,064) | (2,717) |
| Straight-line rent adjustments, net | (765) | (730) | (2,652) | (2,492) |
| Amortization of debt discounts and financing costs | 567 | 1,167 | 1,742 | 3,286 |
| Depreciation and amortization of corporate assets | 211 | 224 | 653 | 625 |
| Non-operating income and expense, net (b) | 21 | 55 | (275) | 791 |
| Unconsolidated joint venture adjustments (c) | — | (10) | — | (172) |
| Core FFO Applicable to Common Shares and Dilutive Securities | $30,107 | $27,642 | $89,222 | $84,065 |
| Weighted average common shares outstanding - basic | 68,526,238 | 67,531,335 | 68,101,901 | 67,521,110 |
| Dilutive effect of unvested restricted shares (d) | — | — | 557,418 | 199,375 |
| Weighted average common shares outstanding - diluted | 68,526,238 | 67,531,335 | 68,659,319 | 67,720,485 |
| Net (loss) income per diluted share | $(0.01) | $(0.01) | $0.06 | $0.04 |
| Per share adjustments for Nareit FFO | 0.46 | 0.42 | 1.28 | 1.21 |
| Nareit FFO per diluted share | $0.45 | $0.41 | $1.34 | $1.25 |
| Per share adjustments for Core FFO | (0.01) | — | (0.04) | (0.01) |
| Core FFO per diluted share | $0.44 | $0.41 | $1.30 | $1.24 |

(a) Reflects our share of adjustments for IAGM's Nareit FFO on the same basis as InvenTrust.

(b) Reflects items which are not pertinent to measuring on-going operating performance, such as miscellaneous and settlement income, and basis difference recognition arising from acquiring the four remaining properties of IAGM in 2023.

(c) Reflects our share of adjustments for IAGM's Core FFO on the same basis as InvenTrust.

(d) For purposes of calculating non-GAAP per share metrics, we apply the same denominator used in calculating diluted earnings per share in accordance with GAAP.

### Liquidity and Capital Resources

#### Capital Investments and Leasing Costs

Operating our properties generally results in paying leasing commissions and making capital investments, including value-enhancing development projects and redevelopment projects.

The following table summarizes the capital resources used for capital investments and leasing costs on a cash basis:

|  | Nine months ended September 30 2024 | 2023 |
| --- | ---: | ---: |
| Tenant improvements | $7,936 | $5,687 |
| Leasing costs | 2,632 | 2,518 |
| Property improvements | 6,652 | 13,626 |
| Capitalized indirect costs (a) | 1,178 | 1,318 |
| Total capital expenditures and leasing costs | 18,398 | 23,149 |
| Development and redevelopment direct costs | 6,410 | 2,510 |
| Development and redevelopment indirect costs (a) | 804 | 650 |
| Capital investments and leasing costs (b) | $25,612 | $26,309 |

(a) Indirect costs include capitalized interest, real estate taxes, insurance, and payroll costs.

(b) As of September 30, 2024 and 2023, total accrued capital investments and leasing costs were $5,008 and $3,836, respectively.

#### Short-Term Liquidity and Capital Resources

On a short-term basis, our principal uses for funds are to pay our operating and corporate expenses, interest and principal on our indebtedness, property capital expenditures, and to make distributions to our stockholders.

Our ability to maintain adequate liquidity for our operations in the future is dependent upon a number of factors, including our revenue, macroeconomic conditions, our ability to contain costs, including capital expenditures, and to collect rents and other receivables, and various other factors, many of which are beyond our control. We will continue to monitor our liquidity position and may seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy. Our ability to raise these funds may also be diminished by other macroeconomic factors.

#### Long-Term Liquidity and Capital Resources

Our objectives are to maximize revenue generated by our retail platform, to further enhance the value of our retail properties to produce attractive current yield and long-term returns for our stockholders, and to generate sustainable and predictable cash flow from our operations to distribute to our stockholders.

Any future determination to pay distributions will be at the discretion of our board of directors (the "Board") and will depend on our financial condition, capital requirements, restrictions contained in current or future financing instruments, and such other factors as our Board deems relevant.

#### Capital Sources and Uses

Our primary sources and uses of capital are as follows:

|  |  |
| --- | --- |
| Sources | Uses |
| •Operating cash flows from our real estate investments; •Proceeds from sales of properties; •Proceeds from mortgage loan borrowings on properties; •Proceeds from corporate borrowings and debt financings; •Proceeds from any ATM Program activities or other equity offerings; and •Proceeds from our Series A Notes and Series B Notes. | •To invest in properties or fund acquisitions; •To fund development, re-development, maintenance and capital expenditures or leasing incentives; •To make distributions to our stockholders; •To service or pay down our debt; •To pay our operating expenses; •To repurchase shares of our common stock; and •To fund other general corporate uses. |

27

In the first quarter of 2022, we established an at-the-market equity offering program (the "ATM Program") pursuant to which we may sell shares of our common stock up to an aggregate purchase price of $250.0 million. During the three and nine months ended September 30, 2024 and 2023, no shares were issued under the ATM Program. As of September 30, 2024, $244.6 million of common stock remains available for issuance under the ATM Program.

On September 25, 2024, we completed an underwritten public offering of our common stock at a price to the public of $28.00 per share. We issued and sold 9,200,000 shares of common stock, including 1,200,000 shares issued in connection with the full exercise of the underwriters' over-allotment option. We received $247.3 million of net proceeds, after deducting $10.3 million in underwriting discounts and commissions.

We believe our status as an NYSE-listed issuer will facilitate supplementing our capital sources by selling equity securities of the Company under the ATM Program or otherwise if and when we believe appropriate to do so. Also, from time to time, we may seek to acquire amounts of our outstanding common stock through cash purchases or exchanges for other securities. Such purchases or exchanges, if any, will depend on our liquidity requirements, contractual restrictions, and other factors. At this time, we believe our current sources of liquidity are sufficient to meet our short- and long-term cash demands.

### Distributions

During the nine months ended September 30, 2024, we declared distributions to our stockholders totaling $48.2 million and paid cash distributions of $45.3 million. As we execute on our retail strategy and continue to evaluate our business, results of operations and cash flows, our Board will continue to evaluate our distribution on a periodic basis.

### Summary of Cash Flows

|  | Nine months ended September 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Cash provided by operating activities | $99,892 | $99,803 | $89 |
| Cash used in investing activities | (108,281) | (76,178) | (32,103) |
| Cash provided by (used in) financing activities | 111,384 | (57,276) | 168,660 |
| Increase (decrease) in cash, cash equivalents and restricted cash | 102,995 | (33,651) | 136,646 |
| Cash, cash equivalents and restricted cash at beginning of period | 99,763 | 137,762 | (37,999) |
| Cash, cash equivalents and restricted cash at end of period | $202,758 | $104,111 | $98,647 |

Cash provided by operating activities of $99.9 million and $99.8 million for the nine months ended September 30, 2024 and 2023, respectively, was generated primarily from income from property operations. Cash provided by operating activities decreased $0.1 million when comparing the nine months ended September 30, 2024 to the same period in 2023, as a result of general working capital fluctuations. Since January 1, 2023, we have acquired eight retail properties and disposed of one.

Cash used in investing activities of $108.3 million for the nine months ended September 30, 2024 was the result of:

- $83.0 million for acquisitions of investment properties, and
- $25.8 million for capital investments, leasing costs, and other investing activities, which were partially offset by:
- $0.5 million in net proceeds received from the sale of investment properties.

Cash used in investing activities of $76.2 million for the nine months ended September 30, 2023 was the result of:

- $152.0 million for acquisitions of investment properties, and
- $28.2 million for capital investments and leasing costs, which were partially offset by cash provided by:
- $12.6 million in net proceeds received from the sale of investment properties, and
- $91.4 million for distributions from unconsolidated entities.

Cash provided by financing activities of $111.4 million for the nine months ended September 30, 2024 was the result of:

- $247.3 million in net proceeds from the underwritten public offering of our common stock, net of underwriting discounts and commissions, and
- $0.3 million in net proceeds from our Employee Stock Purchase Plan (the "ESPP"), which were partially offset by:
- $1.5 million for additional costs incurred in relation to sales of our common stock,
- $45.3 million to pay distributions,
- $1.2 million for the payment of tax withholdings for share-based compensation, and
- $88.2 million for pay-offs of debt and other financing activities.

Cash used in financing activities of $57.3 million for the nine months ended September 30, 2023 was the result of:

- $42.9 million to pay distributions, and
- $14.4 million for pay-offs of debt and other financing activities.

We consider all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements with a maturity of three months or less, at the date of purchase, to be cash equivalents. We maintain our cash and cash equivalents at major financial institutions. The combined account balances at one or more institutions generally exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage. We periodically assess the credit risk associated with these financial institutions. We believe insignificant credit risk exists related to deposits in excess of FDIC insurance coverage.

### Off Balance Sheet Arrangements

None.

### Contractual Obligations

We have obligations related to our mortgage loans, senior notes, term loans, and revolving credit facility as described in *"Note 7. Debt"* in the condensed consolidated financial statements.

The following table presents our obligations to make future payments under debt and lease agreements as of September 30, 2024, exclusive of debt discounts and issuance costs, which are not future cash obligations.

| Long-term debt: | Payments due by year ending December 31 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate, principal (a) | $— | $35,880 | $200,000 | $226,000 | $— | $281,500 | $743,380 |
| Interest | 7,693 | 30,102 | 27,141 | 16,339 | 14,103 | 24,629 | 120,007 |
| Total long-term debt | 7,693 | 65,982 | 227,141 | 242,339 | 14,103 | 306,129 | 863,387 |
| Operating leases (b) | 145 | 511 | 517 | 529 | 522 | 786 | 3,010 |
| Grand total | $7,838 | $66,493 | $227,658 | $242,868 | $14,625 | $306,915 | $866,397 |

(a) Includes variable rate debt swapped to fixed rates through the Company's interest rate swaps.

(b) Includes leases on corporate office spaces.

### Critical Accounting Estimates

Our financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases these estimates, judgments and assumptions on historical experience and various other factors that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates.

There have been no material changes to our critical accounting estimates as compared to the critical accounting estimates described in our *"Management’s Discussion and Analysis of Financial Condition and Results of Operations"* set forth in our Annual Report.

## Market risk

As filed, 2,917 characters.

#### Interest Rate Risk

The Company is subject to market risk associated with changes in interest rates both in terms of variable-rate debt and the price of new fixed-rate debt upon maturity of existing debt. The Company's interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows. As of September 30, 2024, the Company's debt included outstanding variable-rate debt of $400.0 million, all of which has been swapped to a fixed rate.

On March 16, 2023, the Company entered into one interest rate swap agreement with a notional amount of $100.0 million at 3.69%, achieving a fixed interest rate of 4.99%. As of the effective date of April 3, 2023, the entirety of the Company's variable rate term loans were swapped to fixed rates through the maturity dates of its $400.0 million term loan credit agreement ("the Amended Term Loan Agreement").

As of September 30, 2024, the Company is party to five effective interest rate swap agreements which achieve fixed interest rates through the maturity dates of the Amended Term Loan Agreement.

The following table summarizes the Company's interest rate swaps as of September 30, 2024 and December 31, 2023:

| Effective Interest Rate Swaps | Effective Date | Termination Date | InvenTrust Receives | InvenTrust Pays Fixed Rate of | Fixed Rate Achieved | Notional Amount | Fair Value as of September 30, 2024 | December 31, 2023 |
| --- | --- | --- | --- | ---: | ---: | ---: | ---: | ---: |
| 5.5 year term loan | Dec 2, 2019 | Jun 21, 2024 | 1-Month SOFR | N/A | N/A | $— | $— | $855 |
| 5.5 year term loan | Dec 2, 2019 | Jun 21, 2024 | 1-Month SOFR | N/A | N/A | — | — | 857 |
| 5.5 year term loan | Apr 3, 2023 | Mar 22, 2027 | 1-Month SOFR | 3.69% | 4.99% | 100,000 | (892) | (122) |
| 5 year term loan | Dec 21, 2023 | Sep 22, 2026 | 1-Month SOFR | 1.51% | 2.81% | 100,000 | 3,622 | 5,820 |
| 5 year term loan | Dec 21, 2023 | Sep 22, 2026 | 1-Month SOFR | 1.51% | 2.81% | 100,000 | 3,640 | 5,845 |
| 5.5 year term loan | Jun 21, 2024 | Mar 22, 2027 | 1-Month SOFR | 1.54% | 2.84% | 50,000 | 2,194 | 2,451 |
| 5.5 year term loan | Jun 21, 2024 | Mar 22, 2027 | 1-Month SOFR | 1.48% | 2.78% | 50,000 | 2,124 | 2,368 |
|  |  |  |  |  |  | $400,000 | $10,688 | $18,074 |

Gains or losses resulting from marking-to-market derivatives each reporting period are recognized as an increase or decrease in comprehensive income on the condensed consolidated statements of operations and comprehensive (loss) income.

The information presented above does not consider all exposures or positions that could arise in the future. Therefore, the information represented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, the hedging strategies at the time, and the related interest rates.

## Controls and procedures

As filed, 1,391 characters.

#### Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, the Company's management, including its Principal Executive Officer and Principal Financial Officer, evaluated as of September 30, 2024 the effectiveness of the Company's disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and Rule 15d-15(e). Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures, as of September 30, 2024, were effective at a reasonable assurance level for the purpose of ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the SEC and is accumulated and communicated to management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

#### Changes in Internal Control Over Financial Reporting

There were no changes to the Company's internal control over financial reporting during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

## Risk factors

As filed, 227 characters.

As of September 30, 2024, there have been no material changes from the risk factors previously disclosed in response to Item 1A. to Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Filed Oct 29, 2024.
Source: SEC EDGAR, the filing index for accession 0001307748-24-000101. Last ingested by Listed: Nov 4, 2026, 17:26 ET. No prices; not investment advice.