Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Mar. 24, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Inland Real Estate Income Trust, Inc. | |
Entity Central Index Key | 1528985 | |
Document Type | 10-K | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Public Float | $0 | |
Entity Common Stock, Shares Outstanding | 58,311,369 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Investment properties: | ||
Land | $83,250,255 | $12,422,471 |
Building and other improvements | 331,213,150 | 45,904,767 |
Total | 414,463,405 | 58,327,238 |
Less accumulated depreciation | -6,236,688 | -808,145 |
Net investment properties | 408,226,717 | 57,519,093 |
Cash and cash equivalents | 105,871,288 | 26,634,384 |
Investment in unconsolidated entity | 117,805 | 107,126 |
Accounts and rent receivable | 1,977,245 | 141,705 |
Acquired lease intangibles, net | 51,691,241 | 5,854,829 |
Deferred costs, net | 1,694,151 | 351,095 |
Other assets | 1,908,016 | 630,291 |
Total assets | 571,486,463 | 91,238,523 |
Liabilities: | ||
Mortgages and notes payable | 186,033,574 | 32,530,344 |
Accounts payable and accrued expenses | 2,734,288 | 811,431 |
Distributions payable | 2,025,405 | 304,863 |
Acquired below market lease intangibles, net | 18,675,646 | 759,964 |
Deferred investment property acquisition obligations | 3,645,873 | 723,237 |
Due to related parties | 2,693,652 | 3,155,648 |
Other liabilities | 4,218,671 | 200,098 |
Total liabilities | 220,027,109 | 38,485,585 |
Preferred stock | 0 | 0 |
Common stock | 41,997 | 6,746 |
Additional paid in capital | 374,607,850 | 57,735,337 |
Accumulated distributions and net loss | -21,662,711 | -4,989,145 |
Accumulated other comprehensive loss | -1,527,782 | 0 |
Total stockholders equity | 351,459,354 | 52,752,938 |
Total liabilities and stockholders equity | $571,486,463 | $91,238,523 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized | 40,000,000 | 40,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 1,460,000,000 | 1,460,000,000 |
Common stock, shares issued | 41,996,913 | 6,745,615 |
Preferred stock, par value | $0.00 | $0.00 |
Common stock, shares outstanding | 41,996,913 | 6,745,615 |
Additional paid in capital, net of offering costs | $43,565,576 | $8,994,299 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income: | |||
Rental income | $14,932,061 | $2,481,725 | $101,986 |
Tenant recovery income | 3,958,619 | 343,267 | 0 |
Other property income | 55,536 | 0 | 0 |
Total income | 18,946,216 | 2,824,992 | 101,986 |
Expenses: | |||
Property operating expenses | 2,698,637 | 177,994 | 4,534 |
Real estate tax expense | 2,068,406 | 276,875 | 0 |
General and administrative expenses | 2,426,537 | 1,601,087 | 364,752 |
Acquisition related costs | 5,139,511 | 666,042 | 732,739 |
Business management fee | 773,244 | 226,280 | 0 |
Depreciation and amortization | 7,678,906 | 1,004,052 | 41,746 |
Total expenses | 20,785,241 | 3,952,330 | 1,143,771 |
Operating loss | -1,839,025 | -1,127,338 | -1,041,785 |
Interest expense | -2,622,271 | -1,408,000 | -98,097 |
Interest income | 95,011 | 1,411 | 0 |
Equity in earnings of unconsolidated entity | 10,679 | 7,126 | 0 |
Net loss | -4,355,606 | -2,526,801 | -1,139,882 |
Net loss per common share, basic and diluted | ($0.21) | ($1.18) | ($18.04) |
Weighted average number of common shares outstanding, basic and diluted | 20,565,940 | 2,147,947 | 63,198 |
Comprehensive loss: | |||
Net loss | -4,355,606 | -2,526,801 | -1,139,882 |
Unrealized loss on derivatives | -1,809,830 | 0 | 0 |
Reclassification adjustment for amounts recognized in net loss | 282,048 | 0 | 0 |
Comprehensive loss | ($5,883,388) | ($2,526,801) | ($1,139,882) |
Consolidated_Statements_of_Equ
Consolidated Statements of Equity (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Distributions And Net Loss | Other Comprehensive Income / Loss | Total |
Balance at Dec. 31, 2011 | $276 | $192,905 | ($1,173,567) | $0 | ($980,386) |
Distributions declared | 0 | 0 | -13,793 | 0 | -13,793 |
Proceeds from offering | 256 | 2,322,894 | 0 | 0 | 2,323,150 |
Proceeds from offering (in shares) | 256,329 | ||||
Shares repurchased | 0 | ||||
Net loss | 0 | 0 | -1,139,882 | 0 | -1,139,882 |
Balance at Dec. 31, 2012 | 6,746 | 57,735,337 | -4,989,145 | 0 | 52,752,938 |
Balance (in shares) at Dec. 31, 2012 | 276,239 | ||||
Distributions declared | 0 | 0 | -1,288,777 | 0 | -1,288,777 |
Proceeds from offering | 6,419 | 63,356,258 | 0 | 0 | 63,362,677 |
Proceeds from offering (in shares) | 6,418,741 | ||||
Offering costs | 0 | -6,664,330 | 0 | 0 | -6,664,330 |
Proceeds from distribution reinvestment plan | 51 | 480,978 | 0 | 0 | 481,029 |
Proceeds from distribution reinvestment plan (in shares) | 50,635 | ||||
Shares repurchased | 0 | ||||
Discount on shares to related parties | 0 | 369,526 | 0 | 0 | 369,526 |
Net loss | 0 | 0 | -2,526,801 | 0 | -2,526,801 |
Balance at Dec. 31, 2013 | 41,997 | 374,607,850 | -21,662,711 | -1,527,782 | 351,459,354 |
Balance (in shares) at Dec. 31, 2013 | 6,745,615 | ||||
Distributions declared | 0 | 0 | -12,317,960 | 0 | -12,317,960 |
Proceeds from offering | 34,711 | 345,519,422 | 0 | 0 | 345,554,133 |
Proceeds from offering (in shares) | 34,711,753 | ||||
Offering costs | 0 | -34,571,277 | 0 | 0 | -34,571,277 |
Proceeds from distribution reinvestment plan | 568 | 5,394,447 | 0 | 0 | 5,395,015 |
Proceeds from distribution reinvestment plan (in shares) | 567,896 | ||||
Shares repurchased | -28 | -260,505 | 0 | 0 | -260,533 |
Shares repurchased (in shares) | -28,351 | ||||
Discount on shares to related parties | 0 | 150,426 | 0 | 0 | 150,426 |
Unrealized loss on derivatives | 0 | 0 | 0 | -1,809,830 | -1,809,830 |
Reclassification adjustment for amounts included in net loss Sponsor contribution | 0 | 640,000 | 0 | 0 | 640,000 |
Net loss | 0 | 0 | -4,355,606 | 0 | -4,355,606 |
Balance at Dec. 31, 2014 | $6,746 | $57,735,337 | ($4,989,145) | $0 | $52,752,938 |
Balance (in shares) at Dec. 31, 2014 | 41,996,913 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | |||
Net loss | ($4,355,606) | ($2,526,801) | ($1,139,882) |
Depreciation and amortization | 7,678,906 | 1,004,052 | 41,746 |
Amortization of loan fees | 209,829 | 211,589 | 4,503 |
Amortization of acquired market leases, net | -59,205 | -24,446 | -275 |
Straight-line rental income | -314,134 | -14,614 | -854 |
Discount on shares issued to related parties | 150,426 | 369,526 | 0 |
Equity in earnings of unconsolidated entity | -10,679 | -7,126 | 0 |
Other non-cash adjustments | 5,714 | 0 | 0 |
Changes in assets and liabilities: | |||
Accounts payable and accrued expenses | 868,818 | -10,651 | 484,041 |
Accounts and rents receivable | -1,521,406 | -81,236 | 0 |
Due to related parties | -493,469 | 748,065 | 0 |
Other liabilities | 1,072,289 | -50,624 | 0 |
Other assets | -304,691 | -578,837 | 86,679 |
Net cash flows provided by (used in) operating activities | 2,926,792 | -961,103 | -524,042 |
Cash flows from investing activities: | |||
Purchase of investment properties | -310,120,155 | -29,982,371 | -32,163,615 |
Capital expenditures | -130,575 | -316,002 | 0 |
Payment of leasing fees | -4,850 | 0 | 0 |
Investment in unconsolidated entity | 0 | -100,000 | 0 |
Restricted escrow | 12,896 | -12,896 | 0 |
Other assets | -247,208 | 36,682 | 0 |
Net cash flows used in investing activities | -310,489,892 | -30,374,587 | -32,163,615 |
Cash flows from financing activities: | |||
Proceeds from offering | 345,554,133 | 63,362,677 | 2,323,150 |
Proceeds from the distribution reinvestment plan | 5,395,015 | 481,029 | 0 |
Shares repurchased | -260,533 | 0 | 0 |
Payment of offering costs | -34,337,372 | -6,825,740 | -763,816 |
Distributions paid | -10,597,414 | -997,707 | 0 |
Sponsor contribution | 640,000 | 0 | 0 |
Due to related parties, net | 377 | 893 | 1,080,000 |
Deferred investment property acquisition obligation payments | -2,727,907 | 0 | 0 |
Proceeds from mortgages and notes payable | 94,530,574 | 15,259,894 | 32,677,167 |
Payment of mortgage and notes payable | -9,790,000 | -15,406,717 | 0 |
Payment of loan fees | -1,606,869 | -141,305 | -425,882 |
Net cash flows provided by financing activities | 386,800,004 | 55,733,024 | 34,890,619 |
Net increase in cash and cash equivalents | 79,236,904 | 24,397,334 | 2,202,962 |
Cash and cash equivalents at beginning of the period | 26,634,384 | 2,237,050 | 34,088 |
Cash and cash equivalents at end of the period | 105,871,288 | 26,634,384 | 2,237,050 |
Supplemental disclosure of cash flow information: | |||
Land | 70,827,784 | 2,220,000 | 10,202,471 |
Building and improvements | 285,326,011 | 26,577,237 | 19,011,528 |
Acquired in place lease intangibles | 43,066,740 | 2,438,257 | 3,343,087 |
Acquired above market lease intangibles | 5,263,719 | 311,139 | 0 |
Acquired below market lease intangibles | -18,385,796 | -391,214 | -393,471 |
Assumption of mortgage debt at acquisition | -67,466,010 | 0 | 0 |
Non-cash mortgage premium | -1,296,646 | 0 | 0 |
Non-cash fair value of interest rate swaps | -528,265 | 0 | 0 |
Deferred investment property acquisition obligations | -5,510,896 | -723,237 | 0 |
Assumed liabilities | -1,176,486 | -449,811 | 0 |
Purchase of investment properties | 310,120,155 | 29,982,371 | 32,163,615 |
Supplemental schedule of non-cash investing and financing activities: | |||
Cash paid for interest | 2,345,789 | 1,235,597 | 46,516 |
Distributions payable | 2,025,405 | 304,863 | 13,793 |
Accrued offering costs payable | $534,713 | $300,807 | $408,916 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | (1) Organization |
Inland Real Estate Income Trust, Inc. was formed on August 24, 2011 to acquire and manage a diversified portfolio of commercial real estate investments located in the United States. To date, the Company has focused on acquiring retail properties. The Company entered into a Business Management Agreement (the “Agreement”) with IREIT Business Manager & Advisor, Inc. (the “Business Manager”), an affiliate of Inland Real Estate Investment Corporation (the “Sponsor”), to be the Business Manager to the Company. The Company is authorized to sell up to 150,000,000 shares of common stock at $10 each in an initial public “best efforts” offering (the “Offering”) which commenced on October 18, 2012 and to issue 30,000,000 shares at $9.50 each issuable pursuant to the Company’s distribution reinvestment plan (“DRP”). | |
The Company provides the following programs to facilitate future investment in the Company’s shares and to provide limited liquidity for stockholders. | |
The Company provides existing stockholders with the option to purchase additional shares from the Company by automatically reinvesting distributions through the DRP, subject to certain share ownership restrictions. The Company does not pay any selling commissions or the marketing contribution and due diligence expense allowance in connection with the DRP. Shares are currently sold at a price of $9.50 per share. | |
The Company is authorized to purchase shares from stockholders who purchased their shares from the Company or received their shares through a non-cash transfer and who have held their shares for at least one year under the share repurchase program (“SRP”), if requested, if the Company chooses to repurchase them. Subject to funds being available, the Company will limit the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year. Funding for the SRP will come from proceeds the Company receives from the DRP. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, the Company is authorized to use any funds to complete the repurchase, and neither the one year holding period, the limit regarding funds available from the DRP nor the 5% limit will apply. The SRP will immediately terminate if the Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may at any time amend, suspend or terminate the SRP. | |
INLAND REAL ESTATE INCOME TRUST, INC. | |
(a Maryland Corporation) | |
Notes to Consolidated Financial Statements | |
At December 31, 2014, the Company owned 31 retail properties totaling approximately 2.5 million square feet. The properties are located in 14 states. At December 31, 2014, the portfolio had a weighted average physical occupancy of 96.4% and economic occupancy of 97.7%. Economic occupancy excludes square footage associated with an earnout component. At the time of acquisition, certain properties have an earnout component to the purchase price, meaning the Company did not pay a portion of the purchase price at closing related to certain vacant spaces, although it may own the entire property. The Company is not obligated to settle this contingent purchase price obligation unless the seller obtains leases for the vacant space within the time limits and parameters set forth in the applicable acquisition agreement. | |
The fiscal year-end of the Company is December 31. | |
Summary_Of_Significant_Account
Summary Of Significant Accounting Policies | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Accounting Policies [Abstract] | ||||||||||||
Summary Of Significant Accounting Policies | (2) Summary of Significant Accounting Policies | |||||||||||
General | ||||||||||||
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. | ||||||||||||
Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation. | ||||||||||||
Information with respect to square footage and occupancy is unaudited. | ||||||||||||
Consolidation | ||||||||||||
The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly owned subsidiaries. Wholly owned subsidiaries generally consist of limited liability companies (LLCs). All intercompany balances and transactions have been eliminated in consolidation. | ||||||||||||
Each property is owned by a separate legal entity which maintains its own books and financial records and each entity’s assets are not available to satisfy the liabilities of other affiliated entities, except as otherwise disclosed in note 7. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
Partially-Owned Entities | ||||||||||||
The Company will consolidate the operations of a joint venture if the Company determines that it is either the primary beneficiary of a variable interest entity (VIE) or has substantial influence and control of the entity. The primary beneficiary is the party that has the ability to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. There are significant judgments and estimates involved in determining the primary beneficiary of a VIE or the determination of who has control and influence of the entity. When the Company consolidates an entity, the assets, liabilities and results of operations will be included in its consolidated financial statements. | ||||||||||||
In instances where the Company determines that it is not the primary beneficiary of a VIE or the Company does not control the joint venture but can exercise influence over the entity with respect to its operations and major decisions, the Company will use the equity method of accounting. Under the equity method, the operations of a joint venture will not be consolidated with the Company’s operations but instead its share of operations will be reflected as equity in earnings (loss) on unconsolidated joint ventures on its consolidated statements of operations and other comprehensive income. Additionally, the Company’s net investment in the joint venture will be reflected as investment in and advances to joint venture as an asset on the consolidated balance sheets. | ||||||||||||
Offering and Organization Costs | ||||||||||||
Costs associated with the Offering are deferred and charged against the gross proceeds of the Offering upon the sale of shares. Formation and organizational costs were expensed as incurred. | ||||||||||||
Cash and Cash Equivalents | ||||||||||||
The Company considers all demand deposits, money market accounts and all short term investments with a maturity of three months or less, at the date of purchase, to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The account balance may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there could be a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk will not be significant, as the Company does not anticipate the financial institutions’ non-performance. | ||||||||||||
Acquisitions | ||||||||||||
Upon acquisition, the Company determines the total purchase price of each property (note 3), which includes the estimated contingent consideration to be paid or received in future periods, if any. The Company allocates the total purchase price of properties based on the fair value of the tangible and intangible assets acquired and liabilities assumed based on Level 3 inputs, such as comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions, from a third party appraisal or other market sources. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
Certain of the Company’s properties included earnout components to the purchase price, meaning the Company did not pay a portion of the purchase price of the property at closing, although the Company owns the entire property. The Company is not obligated to settle the contingent portion of the purchase price unless space which was vacant at the time of acquisition is later leased by the seller within the time limits and parameters set forth in the related acquisition agreements. The earnout payments are based on a predetermined formula applied to rental income received. The earnout agreements have a limited obligation period from the date of acquisition, as defined. If at the end of the time period certain space has not been leased, occupied and rent producing, the Company will have no further obligation to pay additional purchase price consideration and will retain ownership of that entire property. Based on its best estimate, the Company has recorded a liability for the potential future earnout payment using estimated fair value at the date of acquisition using Level 3 inputs including market rents ranging from $8.00 to $31.00 per square foot, probability of occupancy ranging from 0% to 100% based on leasing activity and utilizing a discount rate of 8.00% to 9.25%. The Company has recorded this earnout amount as additional purchase price of the related property and as a liability included in deferred investment property acquisition obligations on the accompanying consolidated balance sheets. The liability increases as the anticipated payment date draws near based on a present value; such increases in the liability are recorded as amortization expense on the accompanying consolidated statements of operations and other comprehensive loss. The Company records changes in the underlying liability assumptions to acquisition related costs on the accompanying consolidated statements of operations and other comprehensive loss. | ||||||||||||
The portion of the purchase price allocated to acquired above market lease value and acquired below market lease value are amortized on a straight-line basis over the term of the related lease as an adjustment to rental income. For below-market lease values, the amortization period includes any renewal periods with fixed rate renewals. Amortization pertaining to the below market lease value of $470,115, $24,446 and $275 was recorded as an increase to rental income for the years ended December 31, 2014, 2013 and 2012, respectively. Amortization pertaining to the above market lease value of $410,910, $0 and $0 was recorded as a decrease to rental income for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||
The portion of the purchase price allocated to acquired in-place lease value is amortized on a straight-line basis over the acquired leases’ weighted average remaining term. The Company incurred amortization expense pertaining to acquired in-place lease intangibles of $2,083,136, $227,698 and $9,956 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||
The portion of the purchase price allocated to customer relationship value is amortized on a straight-line basis over the weighted-average remaining lease term. As of December 31, 2014, no amount has been allocated to customer relationship value. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
The following table summarizes the Company’s identified intangible assets and liabilities as of December 31, 2014 and 2013. | ||||||||||||
December 31, | ||||||||||||
2014 | 2013 | |||||||||||
Intangible assets: | ||||||||||||
Acquired in-place lease value | $ | 48,820,337 | $ | 5,781,344 | ||||||||
Acquired above market lease value | 5,574,858 | 311,139 | ||||||||||
Accumulated amortization | -2,703,954 | -237,654 | ||||||||||
Acquired lease intangibles, net | $ | 51,691,241 | $ | 5,854,829 | ||||||||
Intangible liabilities: | ||||||||||||
Acquired below market lease value | $ | 19,170,481 | $ | 784,685 | ||||||||
Accumulated amortization | -494,835 | -24,721 | ||||||||||
Acquired below market lease intangibles, net | $ | 18,675,646 | $ | 759,964 | ||||||||
As of December 31, 2014, the weighted average amortization periods for acquired in-place lease, above market lease intangibles and below market lease intangibles are 9, 10 and 17 years, respectively. | ||||||||||||
Estimated amortization of the respective intangible lease assets and liabilities as of December 31, 2014 for each of the five succeeding years and thereafter is as follows: | ||||||||||||
In-Place | Above Market | Below Market | ||||||||||
Leases | Leases | Leases | ||||||||||
2015 | $ | 6,500,515 | $ | 855,884 | $ | -1,571,403 | ||||||
2016 | 6,500,515 | 818,974 | -1,514,008 | |||||||||
2017 | 6,500,515 | 667,488 | -1,423,736 | |||||||||
2018 | 6,067,603 | 558,523 | -1,320,756 | |||||||||
2019 | 5,654,823 | 421,518 | -1,266,284 | |||||||||
Thereafter | 15,303,322 | 1,841,561 | -11,579,459 | |||||||||
Total | $ | 46,527,293 | $ | 5,163,948 | $ | -18,675,646 | ||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
Impairment of Investment Properties | ||||||||||||
The Company assesses the carrying values of its respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Recoverability of the assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review its assets for recoverability, the Company considers current market conditions, as well as its intent with respect to holding or disposing of the asset. If the Company’s analysis indicates that the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, the Company recognizes an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third party appraisals, where considered necessary (Level 3 inputs). | ||||||||||||
The Company estimates the future undiscounted cash flows based on management’s intent as follows: (i) for real estate properties that the Company intends to hold long-term, including land held for development, properties currently under development and operating buildings, recoverability is assessed based on the estimated future net rental income from operating the property and termination value; and (ii) for real estate properties that the Company intends to sell, including land parcels, properties currently under development and operating buildings, recoverability is assessed based on estimated proceeds from disposition that are estimated based on future net rental income of the property and expected market capitalization rates. | ||||||||||||
The use of projected future cash flows is based on assumptions that are consistent with our estimates of future expectations and the strategic plan the Company uses to manage its underlying business. However, assumptions and estimates about future cash flows, including comparable sales values, discount rates, capitalization rates, revenue and expense growth rates and lease-up assumptions which impact the discounted cash flow approach to determining value are complex and subjective. Changes in economic and operating conditions and the Company’s ultimate investment intent that occur subsequent to the impairment analysis could impact these assumptions and result in future impairment charges of the real estate properties. | ||||||||||||
During the years ended December 31, 2014, 2013 and 2012, the Company incurred no impairment charges. | ||||||||||||
Capitalization and Depreciation | ||||||||||||
Real estate acquisitions are recorded at cost less accumulated depreciation. Improvement and betterment costs are capitalized, and ordinary repairs and maintenance are expensed as incurred. | ||||||||||||
Transactional costs in connection with the acquisition of real estate properties and businesses are expensed as incurred. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
Depreciation expense is computed using the straight-line method. Building and improvements are depreciated based upon estimated useful lives of 30 years and 5-15 years for furniture, fixtures and equipment and site improvements. | ||||||||||||
Tenant improvements are amortized on a straight-line basis over the shorter of the life of the asset or the term of the related lease as a component of depreciation and amortization expense. Leasing fees are amortized on a straight-line basis over the term of the related lease as a component of depreciation and amortization expense. | ||||||||||||
Cost capitalization and the estimate of useful lives require judgment and include significant estimates that can and do change. | ||||||||||||
Depreciation expense was $5,428,543, $776,355 and $31,790 for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||
Deferred Loan Fees | ||||||||||||
Direct financing costs are deferred and amortized on a straight-line basis, which approximates the effective interest method, over the term, or anticipated repayment date, of the related agreements as a component of interest expense. | ||||||||||||
Fair Value Measurements | ||||||||||||
The Company has estimated fair value using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: | ||||||||||||
Level 1 − | Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. | |||||||||||
Level 2 − | Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |||||||||||
Level 3 − | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. | |||||||||||
Revenue Recognition | ||||||||||||
The Company commences revenue recognition on its leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of, or controls the physical use of, the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If the Company is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the Company concludes it is not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded by the Company under the lease are treated as lease incentives which reduce revenue recognized over the term of the lease. In these circumstances, the Company begins revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. The Company considers a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes. The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rents receivable in the accompanying consolidated balance sheets. Due to the impact of the straight-line basis, rental income generally will be greater than the cash collected in the early years and will decrease in the later years of a lease. The Company periodically reviews the collectability of outstanding receivables. Allowances are taken for those balances that the Company deems to be uncollectible, including any amounts relating to straight-line rent receivables. | ||||||||||||
Reimbursements from tenants for recoverable real estate tax and operating expenses are accrued as revenue in the period the applicable expenses are incurred. The Company makes certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. The Company does not expect the actual results to materially differ from the estimated reimbursement. | ||||||||||||
The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and amounts due are considered collectible. Upon early lease termination, the Company provides for gains or losses related to unrecovered intangibles and other assets. | ||||||||||||
As a lessor, the Company defers the recognition of contingent rental income, such as percentage rent, until the specified target that triggered the contingent rental income is achieved. | ||||||||||||
REIT Status | ||||||||||||
The Company has qualified and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ended December 31, 2013. As a result, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its taxable income (subject to certain adjustments) to its stockholders. The Company will monitor the business and transactions that may potentially impact its REIT status. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal (including any applicable alternative minimum tax) and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income. | ||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||
(a Maryland Corporation) | ||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||
Derivatives | ||||||||||||
The Company uses derivative instruments, such as interest rate swaps, primarily to manage exposure to interest rate risks inherent in variable rate debt. The Company may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. The Company’s interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In a forward starting swap or treasury lock agreement that the Company cash settles in anticipation of a fixed rate financing or refinancing, the Company will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedging instruments under the accounting requirements for derivatives and hedging. | ||||||||||||
Recent Accounting Pronouncements | ||||||||||||
In May 2014, the Financial Accounting Standards Board, or the FASB, issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||||||||||
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, or ASU 2014-08. ASU 2014-08 changes the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the company’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. Additionally, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The adoption of ASU 2014-08 is effective prospectively for reporting periods beginning on or after December 15, 2014. The Company does not expect the adoption of ASU 2014-08 to have a material effect on the Company’s consolidated financial statements. | ||||||||||||
Acquisitions
Acquisitions | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||
Acquisitions | (3) Acquisitions | ||||||||||||||||||
2014 Acquisitions | |||||||||||||||||||
Date | Property Name | Location | Property | Square | Purchase | ||||||||||||||
Acquired | Type | Footage | Price | ||||||||||||||||
1st Quarter | |||||||||||||||||||
2/21/14 | Park Avenue Shopping Center (1) | Little Rock, AR | Multi-tenant Retail | 69,381 | $ | 23,367,587 | |||||||||||||
2/27/14 | North Hills Square | Coral Springs, FL | Multi-tenant Retail | 63,829 | 11,050,000 | ||||||||||||||
2nd Quarter | |||||||||||||||||||
4/8/14 | Mansfield Pointe | Mansfield, TX | Multi-tenant Retail | 148,529 | 28,100,000 | ||||||||||||||
5/13/14 | MidTowne Shopping Center | Little Rock, AR | Multi-tenant Retail | 126,288 | 41,450,000 | ||||||||||||||
5/23/14 | Lakeside Crossing (1) | Lynchburg, VA | Multi-tenant Retail | 62,706 | 16,967,503 | ||||||||||||||
6/27/14 | Dogwood Festival | Flowood, MS | Multi-tenant Retail | 187,610 | 48,688,846 | ||||||||||||||
3rd Quarter | |||||||||||||||||||
7/11/14 | Pick N Save Center (1) | West Bend, WI | Multi-tenant Retail | 86,800 | 19,122,560 | ||||||||||||||
8/4/14 | Harris Plaza (1) | Layton, UT | Multi-tenant Retail | 123,890 | 27,019,238 | ||||||||||||||
4th Quarter | |||||||||||||||||||
11/5/14 | Dixie Valley (1) | Louisville, KY | Multi-tenant Retail | 119,981 | 12,220,394 | ||||||||||||||
11/21/14 | Landing at Ocean Isle | Ocean Isle, NC | Multi-tenant Retail | 53,220 | 10,894,597 | ||||||||||||||
12/16/14 | Shoppes at Prairie Ridge | Pleasant Prairie, WI | Multi-tenant Retail | 232,606 | 32,527,273 | ||||||||||||||
12/16/14 | Harvest Square | Harvest, AL | Multi-tenant Retail | 70,590 | 13,017,818 | ||||||||||||||
12/16/14 | Heritage Square | Conyers, GA | Multi-tenant Retail | 22,385 | 9,010,529 | ||||||||||||||
12/16/14 & 12/19/14 | The Shoppes at Branson Hills | Branson, MO | Multi-tenant Retail | 256,017 | 42,803,030 | ||||||||||||||
12/16/14 & 12/22/14 | Branson Hills Plaza | Branson, MO | Multi-tenant Retail | 210,201 | 9,667,000 | ||||||||||||||
12/16/14 | Copps Grocery Store | Stevens Point, WI | Single-tenant Retail | 69,911 | 15,544,261 | ||||||||||||||
12/16/14 | Fox Point Plaza | Neenah, WI | Multi-tenant Retail | 171,121 | 17,312,015 | ||||||||||||||
2,075,065 | $ | 378,762,651 | |||||||||||||||||
-1 | There is an earnout component associated with this acquisition that is not included in the purchase price (note 12) | ||||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||||||
(a Maryland Corporation) | |||||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||||
During the year ended December 31, 2014, the Company acquired through its wholly owned subsidiaries, the properties listed above for an aggregate purchase price of $378,762,651 and financed a portion of these acquisitions by borrowing or assuming $161,996,584. | |||||||||||||||||||
The Company incurred $5,139,511, $666,042 and $732,739 for the years ended December 31, 2014, 2013 and 2012, respectively, of acquisition, dead deal and transaction related costs that were recorded in acquisition related costs in the consolidated statements of operations and other comprehensive loss related to both closed and potential transactions. These costs include third party due diligence costs such as appraisals, environmental studies, and legal fees as well as acquisition fees and time and travel expense reimbursements to the Sponsor and its affiliates. For the year ended December 31, 2014, the Business Manager permanently waived acquisition fees of $2,261,648. | |||||||||||||||||||
For properties acquired during the year ended December 31, 2014, the Company recorded revenue of $13,053,706 and property net income of $2,551,593, which excludes expensed acquisition related costs. For the property acquired during the year ended December 31, 2013, the Company recorded revenue of $62,368 and property net income of $49,133, excluding expensed acquisition related costs. | |||||||||||||||||||
The following table presents certain additional information regarding the Company’s acquisitions during the year ended December 31, 2014. The amounts recognized for major assets acquired and liabilities assumed as of the acquisition date are as follows: | |||||||||||||||||||
Property Name | Land | Building | Acquired | Acquired | Fair Value | Deferred | |||||||||||||
and Other | Lease | Below | Adjustment | Investment | |||||||||||||||
Improvements | Intangibles | Market | Related to | Property | |||||||||||||||
Lease | Mortgages and | Acquisition | |||||||||||||||||
Intangibles | Notes Payable | Obligations | |||||||||||||||||
/ Fair Value of | (note 12) | ||||||||||||||||||
Interest Rate | |||||||||||||||||||
Swap | |||||||||||||||||||
Park Avenue Shopping Center | $ | 5,500,000 | $ | 16,365,112 | $ | 2,972,500 | $ | -120,291 | $ | – | $ | -1,349,734 | |||||||
North Hills Square | 4,800,000 | 5,493,151 | 815,870 | -59,021 | – | – | |||||||||||||
Mansfield Pointe | 5,350,000 | 20,002,000 | 3,550,362 | -802,362 | – | – | |||||||||||||
MidTowne Shopping Center | 8,810,000 | 29,698,674 | 4,369,101 | -1,427,775 | – | – | |||||||||||||
Lakeside Crossing | 1,460,000 | 16,998,581 | 1,483,036 | -214,340 | – | -2,759,774 | |||||||||||||
Dogwood Festival | 4,500,000 | 41,865,000 | 3,746,782 | -1,422,936 | – | – | |||||||||||||
Pick N Save Center | 3,150,000 | 14,282,926 | 1,790,898 | – | – | -101,264 | |||||||||||||
Harris Plaza | 6,500,000 | 19,403,207 | 2,473,720 | -1,357,689 | – | – | |||||||||||||
Dixie Valley | 2,807,035 | 9,053,000 | 2,174,725 | -514,242 | – | -1,300,124 | |||||||||||||
Landing at Ocean Isle | 3,053,288 | 7,080,813 | 1,637,335 | -876,839 | – | – | |||||||||||||
Shoppes at Prairie Ridge | 7,520,950 | 22,467,724 | 4,989,895 | -2,155,989 | -295,307 | – | |||||||||||||
Harvest Square | 2,186,106 | 9,329,817 | 1,987,148 | -174,139 | -311,114 | – | |||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||||||
(a Maryland Corporation) | |||||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||||
Property Name | Land | Building | Acquired | Acquired | Fair Value | Deferred | |||||||||||||
and Other | Lease | Below | Adjustment | Investment | |||||||||||||||
Improvements | Intangibles | Market | Related to | Property | |||||||||||||||
Lease | Mortgages and | Acquisition | |||||||||||||||||
Intangibles | Notes Payable | Obligations | |||||||||||||||||
/ Fair Value of | (note 12) | ||||||||||||||||||
Interest Rate | |||||||||||||||||||
Swap | |||||||||||||||||||
Heritage Square | 2,028,048 | 5,538,036 | 1,882,398 | -101,204 | -336,749 | – | |||||||||||||
The Shoppes at Branson Hills | 4,418,273 | 37,229,338 | 6,839,490 | -5,115,245 | -568,826 | – | |||||||||||||
Branson Hills Plaza | 3,786,635 | 6,039,246 | 2,157,127 | -2,173,794 | -142,214 | – | |||||||||||||
Copps Grocery Store | 1,439,827 | 11,798,988 | 2,318,239 | -12,793 | – | ||||||||||||||
Fox Point Plaza | 3,517,622 | 12,680,398 | 3,141,833 | -1,857,137 | -170,701 | – | |||||||||||||
Total | $ | 70,827,784 | $ | 285,326,011 | $ | 48,330,459 | $ | -18,385,796 | $ | -1,824,911 | $ | -5,510,896 | |||||||
The following condensed pro forma consolidated financial statements for the years ended December 31, 2014 and 2013 include pro forma adjustments related to the acquisition and financing during 2014 considered material to the consolidated financial statements which were made for the acquisition of Park Avenue Shopping Center, North Hills Square, Mansfield Shopping Center, Lakeside Crossing, MidTowne Shopping Center, Dogwood Festival, Pick n Save Center, Harris Plaza, Dixie Valley, The Landing at Ocean Isle, Shoppes at Prairie Ridge, Harvest Square, Heritage Square, The Shoppes Branson Hills, Branson Hills Plaza, Copps Grocery Store and Fox Point Plaza which are presented assuming the acquisitions occurred on January 1, 2013. | |||||||||||||||||||
The following condensed pro forma financial information is not necessarily indicative of what the actual results of operations of the Company would have been assuming the 2014 acquisitions had been consummated as of January 1, 2013, nor does it purport to represent the results of operations for future periods. | |||||||||||||||||||
For the year ended December 31, 2014 | |||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 18,946,216 | $ | 23,298,529 | $ | 42,244,745 | |||||||||||||
Net income (loss) | $ | -4,355,606 | $ | 7,015,743 | $ | 2,660,137 | |||||||||||||
Net loss per common share, | $ | -0.21 | $ | 0.06 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 20,565,940 | 41,996,913 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||||||
(a Maryland Corporation) | |||||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||||
For the year ended December 31, 2013 | |||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 2,824,992 | $ | 34,222,410 | 37,047,402 | ||||||||||||||
Net income (loss) | $ | -2,526,801 | $ | 2,213,973 | -312,828 | ||||||||||||||
Net loss per common share, | $ | -1.18 | $ | -0.01 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 2,147,947 | 41,996,913 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
The pro forma information for the years ended December 31, 2014 and 2013 was adjusted to exclude $4,767,001 and $7,029, respectively, of acquisition related costs recorded during such periods. | |||||||||||||||||||
2013 Acquisitions | |||||||||||||||||||
The following table presents certain additional information regarding the Company’s acquisition during the year ended December 31, 2013. The amounts recognized for major assets acquired and liabilities assumed as of the acquisition date are as follows: | |||||||||||||||||||
Property Name | Land | Buildings and | Acquired | Acquired | Deferred | ||||||||||||||
Improvements | Lease | Below | Investment | ||||||||||||||||
Intangibles | Market | Property | |||||||||||||||||
Lease | Acquisition | ||||||||||||||||||
Intangibles | Obligations | ||||||||||||||||||
(note 12) | |||||||||||||||||||
Wedgewood Commons | $ | 2,220,000 | $ | 26,577,237 | $ | 2,749,396 | $ | -391,214 | $ | -723,237 | |||||||||
Total | $ | 2,220,000 | $ | 26,577,237 | $ | 2,749,396 | $ | -391,214 | $ | -723,237 | |||||||||
During the year ended December 31, 2013, the Company acquired through its wholly owned subsidiaries, the property listed above for an aggregate purchase price of $30,432,182 and financed a portion of this acquisition by borrowing $15,259,894. | |||||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||||||
(a Maryland Corporation) | |||||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||||
The condensed pro forma consolidated financial statements for the years ended December 31, 2013 and 2012, include pro forma adjustments related to the acquisition and financing during 2013 considered material to the consolidated financial statements which were made for the acquisition of Wedgewood Commons which is presented assuming the acquisitions occurred on January 1, 2012. | |||||||||||||||||||
The following condensed pro forma financial information is not necessarily indicative of what the actual results of operations of the Company would have been assuming the 2013 acquisition had been consummated as of January 1, 2012, nor does it purport to represent the results of operations for future periods. | |||||||||||||||||||
For the year ended December 31, 2013 | |||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 2,824,992 | $ | 2,921,682 | $ | 5,746,674 | |||||||||||||
Net loss | $ | -2,526,801 | $ | 1,242,846 | $ | -1,283,955 | |||||||||||||
Net loss per common share, | $ | -1.18 | $ | -0.19 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 2,147,947 | 6,745,615 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
For the year ended December 31, 2012 | |||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 101,986 | $ | 982,051 | $ | 1,084,037 | |||||||||||||
Net loss | $ | -1,139,882 | $ | -923,515 | $ | -2,063,397 | |||||||||||||
Net loss per common share, | $ | -18.04 | $ | -0.31 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 63,198 | 6,745,615 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
The pro forma information for the years ended December 31, 2013 and 2012 was adjusted to exclude $518,287 and $0, respectively, of acquisition related costs recorded during such periods. |
Investment_In_Unconsolidated_E
Investment In Unconsolidated Entity | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Investment In Unconsolidated Entity | (4) Investment in Unconsolidated Entity |
The Company is a member of a limited liability company formed as an insurance association captive (the “Insurance Captive”), which is wholly-owned by the Company, Inland Real Estate Corporation, Inland American Real Estate Trust, Inc. and Retail Properties of America, Inc., and serviced by an affiliate of the Business Manager, Inland Risk and Insurance Management Services, Inc. This entity is considered a variable interest entity as defined in U.S. GAAP and the Company is not considered to be the primary beneficiary; however, the Company can exercise significant influence. Therefore, this investment is accounted for utilizing the equity method of accounting. The Company’s risk of loss is limited to its investment and the Company is not required to fund additional capital to the entity. Effective June 30, 2014, Inland Diversified Real Estate Trust, Inc. withdrew from the Insurance Captive. | |
The Company entered into an agreement and paid $100,000 in exchange for a membership interest in the Insurance Captive. The Company’s share of net income from its investment is based on the ratio of each member’s premium contribution to the venture. The Company was allocated income of $10,679, $7,126 and $0 for the year ended December 31, 2014, 2013 and 2012, respectively. |
Operating_Leases
Operating Leases | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes to Financial Statements | ||||||
Operating Leases | (5) Operating Leases | |||||
Minimum lease payments to be received under operating leases including ground leases, as of December 31, 2014 for the years indicated, assuming no expiring leases are renewed, are as follows: | ||||||
Minimum Lease | ||||||
Payments | ||||||
2015 | $ | 31,474,798 | ||||
2016 | 30,042,208 | |||||
2017 | 27,235,679 | |||||
2018 | 25,082,866 | |||||
2019 | 20,576,136 | |||||
Thereafter | 120,994,092 | |||||
Total | $ | 255,405,779 | ||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||
(a Maryland Corporation) | ||||||
Notes to Consolidated Financial Statements | ||||||
The remaining lease terms range from less than one year to 22 years. Most of the revenue from the Company’s properties consists of rents received under long-term operating leases. Some leases require the tenant to pay fixed base rent paid monthly in advance, and to reimburse the Company for the tenant’s pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the Company and recoverable under the terms of the lease. Under these leases, the Company pays all expenses and is reimbursed by the tenant for the tenant’s pro rata share of recoverable expenses paid. Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the consolidated statements of operations and other comprehensive loss. Under leases where all expenses are paid by the Company, subject to reimbursement by the tenant, the expenses are included within property operating expenses and reimbursements are included in tenant recovery income on the consolidated statements of operations and other comprehensive loss. |
Transactions_With_Related_Part
Transactions With Related Parties | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||
Transactions With Related Parties | (6) Transactions with Related Parties | |||||||||||||||||
The Company is party to an agreement with an LLC formed as an insurance association captive which is wholly-owned by the Company, Inland Real Estate Corporation, Inland American Real Estate Trust, Inc., and Retail Properties of America, Inc. The entity is included in the Company’s disclosure of Investment in Unconsolidated Entity (note 4) and is included in investment in unconsolidated entity in the accompanying consolidated balance sheets. | ||||||||||||||||||
The Company owns 1,000 shares of common stock in the Inland Real Estate Group of Companies with a recorded value of $1,000 at December 31, 2014 and 2013. This amount is included in other assets in the accompanying consolidated balance sheets. | ||||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||||||||
(a Maryland Corporation) | ||||||||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||||||||
The following table summarizes the Company’s related party transactions for years ended December 31, 2014 and 2013. Certain compensation and fees payable to the Business Manager for services to be provided to the Company are limited to maximum amounts. | ||||||||||||||||||
Year ended December 31, | Unpaid amounts as of | |||||||||||||||||
2014 | 2013 | 2012 | December 31, | December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||||||
General and administrative: | ||||||||||||||||||
General and administrative | (a) | $ | 465,958 | $ | 267,510 | $ | 21,263 | $ | 137,988 | $ | 76,158 | |||||||
Reimbursements | ||||||||||||||||||
Affiliate share purchase discounts | (b) | 150,426 | 369,526 | – | – | – | ||||||||||||
Total general and administrative | $ | 616,384 | $ | 637,036 | $ | 21,263 | $ | 137,988 | $ | 76,158 | ||||||||
Expenses | ||||||||||||||||||
Acquisition related costs | (c) | $ | 4,209,459 | $ | 543,578 | $ | 558,375 | $ | 156,961 | $ | 1,044,214 | |||||||
Offering costs | (d) | 33,141,160 | 5,784,984 | 218,816 | 210,469 | 178,996 | ||||||||||||
Sponsor non-interest bearing advances | (e) | – | – | 1,080,000 | 1,630,000 | 1,630,000 | ||||||||||||
Real estate management fees | (f) | 630,571 | 80,691 | 2,254 | – | – | ||||||||||||
Business management fees | (g) | 773,244 | 226,280 | – | 558,234 | 226,280 | ||||||||||||
Sponsor contribution | (h) | 640,000 | – | – | – | – | ||||||||||||
(a) | The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses of the Business Manager and its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses to related parties in the accompanying consolidated statements of operations and other comprehensive loss. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
(b) | The Company established a discount stock purchase policy for related parties and related parties of the Business Manager that enables the related parties to purchase shares of common stock at $9.00 per share. The Company sold 150,426 and 369,526 shares to related parties during the year ended December 31, 2014 and 2013, respectively. | |||||||||||||||||
(c) | The Company will pay the Business Manager or its affiliates a fee equal to 1.5% of the “contract purchase price,” as defined, of each asset acquired. The Business Manager and its related parties are also reimbursed for acquisition and transaction related costs of the Business Manager and its related parties relating to the Company’s acquisition of real estate assets, regardless of whether the Company acquires the real estate assets, subject to limits, as defined. For the year ended December 31, 2014, the Business Manager permanently waived acquisition fees of $2,261,648. Such costs are included in acquisition related costs in the accompanying consolidated statements of operations and other comprehensive loss. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||||||||
(a Maryland Corporation) | ||||||||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||||||||
(d) | A related party of the Business Manager receives selling commissions equal to 7.0% of the sale price for each share sold and a marketing contribution equal to 3.0% of the gross offering proceeds from shares sold, the majority of which is re-allowed (paid) to third party soliciting dealers. The Company also reimburses a related party of the Business Manager and the soliciting dealers for bona fide, out-of-pocket itemized and detailed due diligence expenses in amounts up to 0.5% of the gross offering proceeds. The expenses are reimbursed from amounts paid or re-allowed to these entities as a marketing contribution. The Company will reimburse the Sponsor, its affiliates and third parties for costs and other expenses of the Offering that they pay on the Company’s behalf, in an amount not to exceed 1.5% of the gross offering proceeds from shares sold in the “best efforts” offering. The Company does not pay selling commissions or the marketing contribution or reimburse issuer costs in connection with shares of common stock issued through the DRP. Offering costs are offset against the stockholders’ equity accounts. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
(e) | As of December 31, 2014 and 2013, the Company incurred $43,594,427 and $9,023,148 of offering and organization costs, respectively, of which $1,630,000 was advanced by the Sponsor. Our Business Manager or its affiliates will pay or reimburse any organization or offering costs, including any issuer costs, that exceed 11.5% of the gross offering proceeds from shares sold in the “best efforts” offering over the life of the Offering. This advance is included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
(f) | For each property that is managed by Inland National Real Estate Services, LLC, or its affiliates, collectively the Real Estate Managers, the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. Each Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by one of the Real Estate Managers or its affiliates, the Company pays the Real Estate Manager a separate leasing fee based upon prevailing market rates applicable to the geographic market of that property. Further, in the event that the Company engages its Real Estate Managers to provide construction management services for a property, the Company will pay a separate construction management fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic market of the project. The Company also reimburses each Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Managers and their affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer of any of the Real Estate Managers. Real estate management fees and reimbursable expenses are included in property operating expenses in the accompanying consolidated statements of operations and other comprehensive loss. | |||||||||||||||||
(g) | The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets,” as defined in the business management agreement, payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. For the year ended December 31, 2014, the Business Manager was entitled to a business management fee in the amount equal to $1,432,934, of which $433,410 was permanently waived by the Business Manager. In the three months ended March 31, 2014, the Business Manager also permanently waived business management fees of $226,280 incurred for the year ended December 31, 2013, which was included as a reduction of due to related parties in the accompanying consolidated balance sheets as of December 31, 2014. | |||||||||||||||||
(h) | During the year ended December 31, 2014, the Sponsor contributed $640,000 to the Company. Our Sponsor has not received, and will not receive, any additional shares of our common stock for making this contribution. There is no assurance that our Sponsor will continue to contribute any additional monies. | |||||||||||||||||
Mortgages_And_Notes_Payable
Mortgages And Notes Payable | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Notes to Financial Statements | |||||||||||||||
Mortgages And Notes Payable | (7) Mortgages and Notes Payable | ||||||||||||||
As of December 31, 2014 and 2013, the Company had the following mortgages and notes payable outstanding: | |||||||||||||||
Property Name | Stated Interest | Principal | Principal | Maturity Date | Notes | ||||||||||
Rate Per Annum | Balance at | Balance at | |||||||||||||
December 31, | December 31, | ||||||||||||||
2014 | 2013 | ||||||||||||||
Dollar General Portfolio Phase I - five properties | 4.31% | $ | 3,340,450 | $ | 3,340,450 | 1-May-27 | (a),(b) | ||||||||
Newington Fair Shopping Center - Senior Tranche | 3 month LIBOR + 3.25% subject to a minimum rate of 3.50% | – | 9,790,000 | 27-Dec-15 | |||||||||||
Dollar General Portfolio Phase II - seven properties | 4.35% | 4,140,000 | 4,140,000 | 1-Oct-27 | (a),(c) | ||||||||||
Wedgewood Commons Shopping Center | 1 month LIBOR + 1.90% | 15,259,894 | 23-Dec-18 | (d),(e) | |||||||||||
15,259,894 | |||||||||||||||
North Hills Square | 1 month LIBOR + 1.80% | 5,525,000 | – | 28-Mar-19 | (d), (f) | ||||||||||
Mansfield Pointe | 1 month LIBOR + 1.80% | 14,200,000 | – | 7-May-19 | (d),(g) | ||||||||||
Park Avenue Shopping Center | 1 month LIBOR + 1.75% | 11,683,793 | – | 8-May-19 | (d),(h) | ||||||||||
Lakeside Crossing | 1 month LIBOR + 1.95% | 8,483,751 | – | 22-May-19 | (d),(i) | ||||||||||
Dogwood Festival | 1 month LIBOR + 1.75% | 24,351,750 | – | 1-Jul-19 | (d),(j) | ||||||||||
MidTowne Shopping Center | 1 month LIBOR + 1.95% | 20,725,000 | – | 5-Jul-19 | (d),(k) | ||||||||||
Pick N Save Center | 1 month LIBOR + 1.60% | 9,561,280 | – | 31-Jul-19 | (d),(l) | ||||||||||
The Shoppes at Branson Hills & Branson Hills Plaza | 1 month LIBOR + 1.75% | 20,240,000 | – | 15-Dec-19 | (d),(m) | ||||||||||
The Shoppes at Branson Hills – Kohl’s | 5.95% | 6,532,795 | – | 11-Nov-17 | (n) | ||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
Property Name | Stated Interest | Principal | Principal | Maturity Date | Notes | ||||||||||
Rate Per Annum | Balance at | Balance at | |||||||||||||
December 31, | December 31, | ||||||||||||||
2014 | 2013 | ||||||||||||||
Branson Hills Plaza – TJ Maxx | 5.78% | $ | 3,005,240 | $ | – | 11-May-16 | (n) | ||||||||
Harvest Square | 4.65% | 6,800,000 | – | 1-Jan-22 | (o) | ||||||||||
Shoppes at Prairie Ridge | 1 month LIBOR + 1.75% | 15,591,445 | – | 15-Dec-19 | (d),(p) | ||||||||||
Fox Point Plaza | 1 month LIBOR + 1.85% | 10,836,530 | – | 15-Dec-19 | (d),(q) | ||||||||||
Heritage Square | 5.10% | 4,460,000 | – | 1-Jul-21 | (o) | ||||||||||
$ | 184,736,928 | $ | 32,530,344 | (r) | |||||||||||
(a) | The Company’s Sponsor, IREIC, has guaranteed payment and performance of the debt in the event the Company fails to provide access or information to the properties or fails to obtain the lender’s prior written consent to any liens on or transfers of the properties, and in the event of any losses, costs or damages incurred by the lender as a result of fraud or intentional misrepresentation of any individual borrower, gross negligence or willful misconduct, material waste of the properties and the breach of any representation or warranty concerning environmental laws, among other things. The Company did not pay any fees or other consideration to our Sponsor for this guarantee. | ||||||||||||||
(b) | The loan requires monthly payments of interest only until December 1, 2019 (the “anticipated repayment date”). In the event the loan is not repaid as of the anticipated repayment date, the loan will bear interest at a rate equal to 3% per annum plus the greater of: (i) 4.313%; or (ii) the seven year swap yield as of the first business day after the anticipated repayment date; provided, however, that the revised interest rate may not exceed 9.31% per annum. In addition, the Company is required to make monthly payments of $18,000 until the maturity date. | ||||||||||||||
The loan may be prepaid in full, but not in part, any time after December 1, 2014, provided that if the prepayment occurs prior to September 1, 2019, the Company will be required to pay a prepayment premium equal to the greater of: (i) 1% of the outstanding principal balance of the loan; or (ii) the excess, if any, of: (a) the sum of the present values of all then-schedule payments of principal and interest under the loan documents, over (b) the principal amount being prepaid. Subject to satisfying certain conditions, as defined, the Company may prepay a portion of the loan equal to 120% of the portion of the loan allocated to a property and obtain the release of its property and the release of its related obligations under the loan documents. Assuming no payment has been made on principal in advance of the anticipated repayment date approximately $3,340,000 will be due on the anticipated repayment date. The loan is secured by cross-collateralized first mortgages on the five properties. | |||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
(c) | The loan requires monthly payments of interest only until January 1, 2020 (the “anticipated repayment date”). In the event the loan is not repaid as of the anticipated repayment date the loan will bear interest at a rate equal to 3% per annum plus the greater of: (i) 4.347%; or (ii) the seven year swap yield as of the first business day after the anticipated repayment date provided, however, that the revised interest rate may not exceed the 9.347% per annum. In addition, the Company will be required to make monthly payments of $22,653 until the maturity date. | ||||||||||||||
The loan may be prepaid in full, but not in part, any time after January 1, 2015, provided that if the prepayment occurs prior to October 1, 2019, the Company will be required to pay a prepayment premium equal to the greater of: (i) 1% of the outstanding principal balance of the loan; or (ii) the excess, if any, of: (a) the sum of the present values of all then-scheduled payments of principal and interest under the loan documents, over (b) the principal amount being prepaid. Subject to satisfying certain conditions, as defined, the Company may prepay a portion of the loan equal to 120% of the portion of the loan allocated to a property and obtain the release of its property and the release of its related obligations under the loan documents. The loan is secured by cross-collateralized first mortgages on the seven properties. | |||||||||||||||
(d) | The 1 month LIBOR rate at December 31, 2014 was 0.17%. | ||||||||||||||
(e) | The loan requires monthly payments of interest only until December 23, 2018 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. | ||||||||||||||
(f) | The loan requires monthly payments of interest only until March 28, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 4.02% beginning in year two through maturity. | ||||||||||||||
(g) | The loan requires monthly payments of interest only until May 7, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 3.90% beginning in year two through maturity. | ||||||||||||||
(h) | The loan requires monthly payments of interest only until May 8, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 3.90% beginning in year two through maturity. | ||||||||||||||
(i) | The loan requires monthly payments of interest only until May 22, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 3.95% beginning in year two through maturity. | ||||||||||||||
(j) | The loan requires monthly payments of interest only until July 1, 2019 when all principal and unpaid interest is due. Prior to January 1, 2017, the loan may not be prepaid in whole or in part. Thereafter, the loan may be prepaid with a prepayment premium of 2% of the principal amount from January 1, 2017 through July 1, 2017, 1% of the principal amount from July 2, 2017 through July 1, 2018 and at par after July 1, 2018. The Company entered into a swap which fixed the interest rate at 3.597%. | ||||||||||||||
(k) | The loan requires monthly payments of interest only until July 5, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 4.06% beginning in year two through maturity. | ||||||||||||||
(l) | The loan requires monthly payments of interest only until July 31, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a swap which fixed the interest rate at 3.54%. | ||||||||||||||
(m) | The loan was assumed at acquisition and requires monthly payments of interest only until December 15, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company assumed a swap which fixed the interest rate at 2.88% on $10,150,000 until May 9, 2017. | ||||||||||||||
(n) | The loan was assumed at acquisition and requires monthly payments of principal and interest until the maturity date, on which date the outstanding principal balance of the loan plus all accrued and unpaid interest will be due. There is a prepayment premium associated with this loan. | ||||||||||||||
(o) | The loan was assumed at acquisition and requires monthly payments of interest only until maturity date, on which date the outstanding principal balance of the loan plus all accrued and unpaid interest will be due. There is a prepayment premium associated with this loan. | ||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
(p) | The loan was assumed at acquisition and requires monthly payments of interest only until December 15, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company assumed a swap which fixed the interest rate at 3.72% on $13,358,984 until January 22, 2016. | ||||||||||||||
(q) | The loan was assumed at acquisition and requires monthly payments of interest only until December 15, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company assumed a swap which fixed the interest rate at 3.35% until October 21, 2016. | ||||||||||||||
(r) | Excludes mortgage premiums of $1,296,646 and $0 as of December 31, 2014 and 2013, respectively. | ||||||||||||||
The principal amount of our mortgage loans outstanding as of December 31, 2014 was $184,736,928 and had a weighted average stated interest rate of 3.02% per annum, which includes effects of interest rate swaps. All of the Company’s mortgage loans are secured by first mortgages on the real estate assets or are guaranteed by the Sponsor. No fees were paid in connection with any guarantees issued by the Sponsor. | |||||||||||||||
The mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. As of December 31, 2014, all of the mortgages were current in payments and the Company was in compliance with such covenants. | |||||||||||||||
The following table shows the scheduled maturities of mortgages and notes payable as of December 31, 2014 and for the next five years and thereafter: | |||||||||||||||
Mortgages | Weighted | ||||||||||||||
and Notes | Average Interest Rate | ||||||||||||||
Payable (1) | |||||||||||||||
2015 | $ | – | – | ||||||||||||
2016 | 3,005,240 | 5.78% | |||||||||||||
2017 | 6,532,795 | 5.95% | |||||||||||||
2018 | 15,259,894 | 2.07% | |||||||||||||
2019 | 141,198,549 | 2.71% | |||||||||||||
Thereafter | 18,740,450 | 4.63% | |||||||||||||
Total | $ | 184,736,928 | 3.02% | ||||||||||||
(1) Excludes mortgage premiums associated with debt assumed at acquisition of $1,296,646. | |||||||||||||||
The Company estimates the fair value of its total debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by the Company’s lenders using Level 3 inputs. The carrying value of the Company’s mortgage debt was $184,736,928 and $32,530,344 as of December 31, 2014 and December 31, 2013, respectively, and its estimated fair value was $185,260,000 and $32,550,000 as of December 31, 2014 and December 31, 2013, respectively. | |||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
Interest Rate Swap Agreements | |||||||||||||||
The Company entered into interest rate swaps to fix certain of its floating LIBOR based debt under variable rate loans to a fixed rate to manage its risk exposure to interest rate fluctuations. The Company will generally match the maturity of the underlying variable rate debt with the maturity date on the interest swap. For the years ended December 31, 2014 and 2013, the Company recorded interest expense of $33,293 and $0, respectively, related to interest rate swaps. | |||||||||||||||
Amounts reported in comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate debt. The Company estimates that an additional $1,021,747 will be reclassified from comprehensive loss as an increase to interest expense over the next twelve months. | |||||||||||||||
The following table summarizes the Company’s interest rate swap contracts outstanding as of December 31, 2014. | |||||||||||||||
Date | Effective | Maturity | Pay | Receive | Notional | Fair Value at | |||||||||
Entered | Date | Date | Fixed | Floating | Amount | December 31, | |||||||||
Rate | Rate Index | 2014 | |||||||||||||
28-Mar-14 | 1-Mar-15 | March 28, 2019 | 1 month | $ | 5,525,000 | $ | -149,215 | ||||||||
2.22% | LIBOR | ||||||||||||||
8-May-14 | 5-May-15 | 7-May-19 | 2.10% | 1 month | 14,200,000 | -264,692 | |||||||||
LIBOR | |||||||||||||||
23-May-14 | 1-May-15 | 8-May-19 | 2.00% | 1 month | 8,483,751 | -125,340 | |||||||||
LIBOR | |||||||||||||||
6-Jun-14 | 1-Jun-15 | 22-May-19 | 2.15% | 1 month | 11,683,793 | -225,944 | |||||||||
LIBOR | |||||||||||||||
26-Jun-14 | 5-Jul-15 | 5-Jul-19 | 2.11% | 1 month | 20,725,000 | -323,303 | |||||||||
LIBOR | |||||||||||||||
27-Jun-14 | 1-Jul-14 | 1-Jul-19 | 1.85% | 1 month | 24,351,750 | -340,835 | |||||||||
LIBOR | |||||||||||||||
31-Jul-14 | 31-Jul-14 | 31-Jul-19 | 1.94% | 1 month | 9,561,280 | -170,119 | |||||||||
LIBOR | |||||||||||||||
16-Dec-14 | 16-Dec-14 | 22-Jun-16 | 1.97% | 1 month | 13,358,984 | -280,834 | |||||||||
LIBOR | |||||||||||||||
16-Dec-14 | 16-Dec-14 | 21-Oct-16 | 1.50% | 1 month | 10,836,530 | -158,606 | |||||||||
LIBOR | |||||||||||||||
16-Dec-14 | 16-Dec-14 | 9-May-17 | 1.13% | 1 month | 10,150,000 | -50,452 | |||||||||
LIBOR | |||||||||||||||
Total | $ | 128,876,088 | $ | -2,089,340 | |||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
The table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of December 31, 2014 and 2013. | |||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | ||||||||||||
Location | Location | ||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||
Interest rate swaps | Other liabilities | $ | 2,089,340 | Other liabilities | $ | – | |||||||||
The table below presents the effect of the Company’s derivative financial instruments on the consolidated statement of operations and other comprehensive loss (“OCL”) for the years ended December 31, 2014 and 2013. | |||||||||||||||
Year Ended December 31 | |||||||||||||||
Derivatives in Cash Flow Hedging Relationships | 2014 | 2013 | |||||||||||||
Amount of Loss Recognized in OCL on Derivative (Effective Portion) | $ | -1,809,830 | $ | – | |||||||||||
Amount of Loss Reclassified from Accumulated OCL into Income (Effective Portion) | $ | 282,048 | $ | – | |||||||||||
Amount of Loss Recognized in Income on Derivative (Ineffective Portion) | $ | -426 | $ | – | |||||||||||
Year Ended December 31 | |||||||||||||||
Derivatives Not Designated as Hedging Instruments | 2014 | 2013 | |||||||||||||
Amount of Loss Recognized in Income on Derivative (Ineffective Portion) | $ | -32,867 | $ | – | |||||||||||
Fair_Value_Financial_Instrumen
Fair Value Financial Instruments | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
Fair Value Financial Instruments | (8) Fair Value Financial Instruments | |||||||||
In some instances, certain of the Company’s assets and liabilities are required to be measured or disclosed at fair value according to a fair value hierarchy pursuant to relevant accounting literature. This hierarchy ranks the quality and reliability of the inputs used to determine fair values, which are then classified and disclosed in one of three categories. The fair value hierarchy consists of three broad levels, which are described within Note 2. | ||||||||||
Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their classifications within the fair value hierarchy levels. | ||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||
(a Maryland Corporation) | ||||||||||
Notes to Consolidated Financial Statements | ||||||||||
For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of the fair value for each major category of assets and liabilities is presented below: | ||||||||||
Fair Value Measurements at December 31, 2014 | ||||||||||
Quoted Prices in | Significant | Significant | ||||||||
Active Markets | Other | Unobservable | ||||||||
for Identical | Observable | Inputs | ||||||||
Assets | Inputs | (Level 3) | ||||||||
(Level 1) | (Level 2) | |||||||||
Description | ||||||||||
Derivative interest rate instruments | $ | – | $ | -2,089,340 | $ | – | ||||
Total liabilities | $ | – | $ | -2,089,340 | $ | – | ||||
The fair value of derivative instruments was estimated based on data observed in the forward yield curve which is widely observed in the marketplace. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty's nonperformance risk in the fair value measurements which utilizes Level 3 inputs, such as estimates of current credit spreads. The Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative and therefore has classified this in Level 2 of the hierarchy. | ||||||||||
Income_Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (9) Income Taxes |
The Company had no uncertain tax positions as of December 31, 2014 and December 31, 2013. The Company expects no significant increases or decreases in uncertain tax positions due to changes in tax positions within one year of December 31, 2014. The Company has no interest or penalties relating to income taxes recognized in the consolidated statements of operations and other comprehensive loss for the years ended December 31, 2014 and 2013. As of December 31 2014, returns for the calendar years 2013, 2012 and 2011 remain subject to examination by U.S. and various state and local tax jurisdictions. | |
Distributions
Distributions | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Notes to Financial Statements | ||||||||
Distributions | (10) Distributions | |||||||
The Company currently pays distributions based on daily record dates, payable monthly in arrears. The distributions that the Company currently pays are equal to a daily amount of $0.001643836, per share based upon a 365-day period. During the years ended December 31, 2014, 2013 and 2012, the Company declared cash distributions totaling $12,317,960, $1,288,777 and $13,793, respectively. | ||||||||
For federal income tax purposes, distributions may consist of ordinary dividend income, non-taxable return of capital, capital gains or a combination thereof. Distributions to the extent of the Company’s current and accumulated earnings and profits for federal income tax purposes are taxable to the recipient as either ordinary dividend income or capital gain distributions. Distributions in excess of these earnings and profits (calculated for income tax purposes) constitute a non-taxable return of capital rather than ordinary dividend income or a capital gain distribution and reduce the recipient’s basis in the shares to the extent thereof. Distributions in excess of earnings and profits that reduce a recipient’s basis in the shares have the effect of deferring taxation of the amount of the distribution until the sale of the stockholder’s shares. If the recipient's basis is reduced to zero, distributions in excess of the aforementioned earnings and profits (calculated for income tax purposes) constitute taxable gain. | ||||||||
In order to maintain the Company’s status as a REIT, the Company must distribute at least 90% of its taxable income, subject to certain adjustments, to its stockholders. For the years ended December 31, 2014 and 2013, the Company’s taxable income (loss) was $3,283,070 (unaudited) and $(1,397,240) (unaudited), respectively. | ||||||||
The Company declared monthly distributions to its common stockholders totaling $12,317,960 or $0.60 on an annual basis per share for the year ended December 31, 2014. The Company declared monthly distributions to its common stockholders totaling $1,288,777 or $0.60 on an annual basis per share for the year ended December 31, 2013. Future distributions are determined by the Company’s board of directors. The Company expects to continue paying distributions to maintain its status as a REIT. | ||||||||
The following table sets forth the taxability of distributions on common shares, on a per share basis, paid in 2014 and 2013: | ||||||||
2014 | 2013 | |||||||
Ordinary income | $ | 0.19 | $ | 0 | ||||
Nontaxable return of capital | 0.41 | 0.6 | ||||||
Earnings_Per_Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2014 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | (11) Earnings (loss) per Share |
Basic earnings (loss) per share (“EPS”) are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the “common shares”). Diluted EPS is computed by dividing net income (loss) by the common shares plus potential common shares issuable upon exercising options or other contracts. As of December 31, 2014, 2013 and 2012, the Company did not have any dilutive common share equivalents outstanding. | |
Commitments_And_Contingencies
Commitments And Contingencies | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Notes to Financial Statements | |||||||
Commitments And Contingencies | (12) Commitments and Contingencies | ||||||
The acquisition of certain of the Company’s properties included an earnout component to the purchase price. The maximum potential earnout payments are $4,785,682 and $723,237 at December 31, 2014 and 2013, respectively. The table below presents the change in the Company’s earnout liability for years ended December 31, 2014 and 2013. | |||||||
2014 | 2013 | ||||||
Earnout liability-beginning of period | $ | 723,237 | $ | – | |||
Increases: | |||||||
Acquisitions | 5,510,896 | 723,237 | |||||
Amortization expense | 167,226 | – | |||||
Decreases: | |||||||
Earnout payments | -2,789,740 | – | |||||
Other: | |||||||
Adjustments to acquisition related costs | 34,254 | – | |||||
Earnout liability – end of period | $ | 3,645,873 | $ | 723,237 | |||
The Company may be subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of the Company. | |||||||
Segment_Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Segment Reporting | (13) Segment Reporting |
The Company has one reportable segment, retail real estate, as defined by U.S. GAAP for the years ended December 31, 2014 and 2013. | |
Concentration of credit risk with respect to accounts receivable currently exists due to the small number of tenants currently comprising the Company's rental revenue. The concentration of revenues for these tenants increases the Company's risk associated with nonpayment by these tenants. In an effort to reduce risk, the Company performs ongoing credit evaluations of its larger tenants. | |
For the year ended December 31, 2014, approximately 7.7% of the Company’s rental revenue was generated by 12 properties leased to Dolgencorp, LLC, a subsidiary of Dollar General Corporation, and approximately 6.8% of the Company’s rental revenue was generated by one location leased to L.A. Fitness. |
Subsequent_Events
Subsequent Events | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Subsequent Events [Abstract] | |||||||||||||
Subsequent Events | (14) Subsequent Events | ||||||||||||
The Company’s board of directors declared distributions payable to stockholders of record each day beginning on the close of business on January 1, 2015 through the close of business on March 31, 2015. Distributions were declared in a daily amount equal to $0.001643836 per share, which if paid each day for a 365-day period, would equate to $0.60 per share or a 6.0% annualized rate based on a purchase price of $10.00 per share. Distributions were and will continue to be paid monthly in arrears, as follows: | |||||||||||||
• | In January 2015, total distributions declared for the month of December 2014 were paid in the amount equal to $2,025,405, including $1,051,472 which was reinvested through the Company’s DRP, resulting in the issuance of an additional 110,681 shares of common stock. | ||||||||||||
• | In February 2015, total distributions declared for the month of January 2015 were paid in the amount equal to $2,229,440, including $1,051,581 which was reinvested through the Company’s DRP, resulting in the issuance of an additional 121,114 shares of common stock. | ||||||||||||
• | In March 2015, total distributions declared for the month of February 2015 were paid in the amount equal to $2,212,069, including $1,141,640 which was reinvested through the Company’s DRP, resulting in the issuance of an additional 120,173 shares of common stock. | ||||||||||||
On February 19, 2015, the Company’s Sponsor contributed $3,283,093 to the Company. For U.S. GAAP purposes, these monies have been treated as a capital contribution from the Company’s Sponsor, although the Company’s Sponsor has not received, and will not receive, any additional shares of the Company’s common stock for this contribution. | |||||||||||||
On February 19, 2015, the Company paid an aggregate special distribution of $3,283,093 to stockholders of record as of January 30, 2015 ($0.07 per share), none of which was reinvested through the DRP. | |||||||||||||
The Company purchased the following properties from unaffiliated third parties subsequent to December 31, 2014. | |||||||||||||
Date Acquired | Property Name | Location | Square Footage | Purchase Price | Assumed Debt | ||||||||
1/29/15 | The Shoppes at Lake Park | West Valley City, UT | 52,997 | $ | 11,587,000 | $ | – | ||||||
2/19/15 | Plaza at Prairie Ridge | Pleasant Prairie, WI | 9,035 | $ | 3,400,000 | $ | – | ||||||
3/13/15 | Green Tree Shopping Center | Katy, TX | 147,658 | $ | 26,244,094 | $ | – | ||||||
3/16/15 | Eastside Junction | Athens, AL | 79,700 | $ | 12,278,000 | $ | 6,270,000 | ||||||
3/16/15 | Prattville Town Center | Prattville, AL | 168,842 | $ | 33,329,000 | $ | 15,930,000 | ||||||
3/16/15 | Fairgrounds Crossing | Hot Springs, AR | 155,127 | $ | 29,197,000 | $ | 13,453,000 | ||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||
(a Maryland Corporation) | |||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||
Date | Property Name | Location | Square | Purchase Price | Assumed Debt | ||||||||
Acquired | Footage | ||||||||||||
3/16/15 | Regal Court | Shreveport, LA | 363,174 | $ | 50,364,000 | $ | – | ||||||
3/16/15 | Shops at Hawk Ridge | St. Louis, MO | 75,951 | $ | 12,721,000 | $ | – | ||||||
3/16/15 | Whispering Ridge | Omaha, NE | 69,676 | $ | 15,803,000 | $ | – | ||||||
3/16/15 | Walgreens Plaza | Jacksonville, NC | 42,219 | $ | 13,663,000 | $ | 4,650,000 | ||||||
Due to the timing of the acquisitions, the purchase price allocation for assets acquired and liabilities assumed at acquisition date and pro forma financial information are not being presented as the information was not available at the time of this filing. | |||||||||||||
The following table provides information regarding the total shares sold in our offering as of March 24, 2015: | |||||||||||||
Shares | Gross Offering | Commissions | Proceeds to the | ||||||||||
Proceeds | and Fees | Company, | |||||||||||
($) (1) | ($) (2) | Before Expenses | |||||||||||
($) (3) | |||||||||||||
From our Sponsor in connection | 20,000 | $ | 200,000 | – | $ | 200,000 | |||||||
with our formation | |||||||||||||
Shares sold in the offering | 57,154,967.21 | 568,580,837 | 53,643,114 | 514,937,723 | |||||||||
Shares sold pursuant to our | 970,353.03 | 9,218,353 | – | 9,218,353 | |||||||||
distribution reinvestment plan | |||||||||||||
Shares purchased pursuant to | -33,951.24 | -313,533 | – | -313,533 | |||||||||
our share repurchase program | |||||||||||||
Total: | 58,111,369.00 | $ | 577,685,657 | 53,643,114 | $ | 524,042,543 | |||||||
(1) | Gross proceeds received by us as of the date of this table for shares sold to investors pursuant to accepted subscription agreements. | ||||||||||||
-2 | Inland Securities Corporation serves as dealer manager of the Offering and is entitled to receive selling commissions and certain other fees, as discussed further in the prospectus for the “best efforts” offering dated October 18, 2012 as the same may be supplemented from time to time. | ||||||||||||
-3 | Organization and offering expenses, excluding commissions, will not exceed 1.5% of the gross offering proceeds. These expenses include registration and filing fees, legal and accounting fees, printing and mailing expenses, bank fees and other administrative expenses. | ||||||||||||
Quarterly_Supplemental_Financi
Quarterly Supplemental Financial Information | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Notes to Financial Statements | ||||||||||||
Quarterly Supplemental Financial Information | (15) Quarterly Supplemental Financial Information (unaudited) | |||||||||||
The following represents the results of operations, for each quarterly period, during 2014 and 2013. | ||||||||||||
2014 | ||||||||||||
31-Dec | 30-Sep | 30-Jun | 31-Mar | |||||||||
Total income | $ | 7,659,205 | $ | 6,042,578 | $ | 3,510,325 | $ | 1,734,108 | ||||
Net loss | $ | -611,575 | $ | -816,622 | $ | -2,363,250 | $ | -564,159 | ||||
Net loss per common share, | $ | -0.02 | $ | -0.03 | $ | -0.18 | $ | -0.06 | ||||
basic and diluted (1) | ||||||||||||
Weighted average number of | 36,112,929 | 23,733,441 | 13,377,773 | 8,703,608 | ||||||||
common shares outstanding, | ||||||||||||
basic and diluted (1) | ||||||||||||
2013 | ||||||||||||
31-Dec | 30-Sep | 30-Jun | 31-Mar | |||||||||
Total income | $ | 731,912 | $ | 692,681 | $ | 711,252 | $ | 689,147 | ||||
Net loss | $ | -818,920 | $ | -395,666 | $ | -452,346 | $ | -859,869 | ||||
Net loss per common share, | $ | -0.17 | $ | -0.18 | $ | -0.43 | $ | -1.71 | ||||
basic and diluted (1) | ||||||||||||
Weighted average number of | 4,766,862 | 2,221,493 | 1,051,400 | 504,243 | ||||||||
common shares outstanding, | ||||||||||||
basic and diluted (1) | ||||||||||||
(1) | Quarterly net loss per common share amounts may not total the annual amounts due to rounding and the changes in the number of weighted common shares outstanding. |
Summary_Of_Significant_Account1
Summary Of Significant Accounting Policies (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Accounting Policies [Abstract] | ||||||||||||
Intangible assets and liabilities for the period | December 31, | |||||||||||
2014 | 2013 | |||||||||||
Intangible assets: | ||||||||||||
Acquired in-place lease value | $ | 48,820,337 | $ | 5,781,344 | ||||||||
Acquired above market lease value | 5,574,858 | 311,139 | ||||||||||
Accumulated amortization | -2,703,954 | -237,654 | ||||||||||
Acquired lease intangibles, net | $ | 51,691,241 | $ | 5,854,829 | ||||||||
Intangible liabilities: | ||||||||||||
Acquired below market lease value | $ | 19,170,481 | $ | 784,685 | ||||||||
Accumulated amortization | -494,835 | -24,721 | ||||||||||
Acquired below market lease intangibles, net | $ | 18,675,646 | $ | 759,964 | ||||||||
Amortization of the respective intangible lease assets and liabilities | In-Place | Above Market | Below Market | |||||||||
Leases | Leases | Leases | ||||||||||
2015 | $ | 6,500,515 | $ | 855,884 | $ | -1,571,403 | ||||||
2016 | 6,500,515 | 818,974 | -1,514,008 | |||||||||
2017 | 6,500,515 | 667,488 | -1,423,736 | |||||||||
2018 | 6,067,603 | 558,523 | -1,320,756 | |||||||||
2019 | 5,654,823 | 421,518 | -1,266,284 | |||||||||
Thereafter | 15,303,322 | 1,841,561 | -11,579,459 | |||||||||
Total | $ | 46,527,293 | $ | 5,163,948 | $ | -18,675,646 |
Acquisitions_Tables
Acquisitions (Tables) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||
Current year acquisitions data | Date | Property Name | Location | Property | Square | Purchase | |||||||||||||
Acquired | Type | Footage | Price | ||||||||||||||||
1st Quarter | |||||||||||||||||||
2/21/14 | Park Avenue Shopping Center (1) | Little Rock, AR | Multi-tenant Retail | 69,381 | $ | 23,367,587 | |||||||||||||
2/27/14 | North Hills Square | Coral Springs, FL | Multi-tenant Retail | 63,829 | 11,050,000 | ||||||||||||||
2nd Quarter | |||||||||||||||||||
4/8/14 | Mansfield Pointe | Mansfield, TX | Multi-tenant Retail | 148,529 | 28,100,000 | ||||||||||||||
5/13/14 | MidTowne Shopping Center | Little Rock, AR | Multi-tenant Retail | 126,288 | 41,450,000 | ||||||||||||||
5/23/14 | Lakeside Crossing (1) | Lynchburg, VA | Multi-tenant Retail | 62,706 | 16,967,503 | ||||||||||||||
6/27/14 | Dogwood Festival | Flowood, MS | Multi-tenant Retail | 187,610 | 48,688,846 | ||||||||||||||
3rd Quarter | |||||||||||||||||||
7/11/14 | Pick N Save Center (1) | West Bend, WI | Multi-tenant Retail | 86,800 | 19,122,560 | ||||||||||||||
8/4/14 | Harris Plaza (1) | Layton, UT | Multi-tenant Retail | 123,890 | 27,019,238 | ||||||||||||||
4th Quarter | |||||||||||||||||||
11/5/14 | Dixie Valley (1) | Louisville, KY | Multi-tenant Retail | 119,981 | 12,220,394 | ||||||||||||||
11/21/14 | Landing at Ocean Isle | Ocean Isle, NC | Multi-tenant Retail | 53,220 | 10,894,597 | ||||||||||||||
12/16/14 | Shoppes at Prairie Ridge | Pleasant Prairie, WI | Multi-tenant Retail | 232,606 | 32,527,273 | ||||||||||||||
12/16/14 | Harvest Square | Harvest, AL | Multi-tenant Retail | 70,590 | 13,017,818 | ||||||||||||||
12/16/14 | Heritage Square | Conyers, GA | Multi-tenant Retail | 22,385 | 9,010,529 | ||||||||||||||
12/16/14 & 12/19/14 | The Shoppes at Branson Hills | Branson, MO | Multi-tenant Retail | 256,017 | 42,803,030 | ||||||||||||||
12/16/14 & 12/22/14 | Branson Hills Plaza | Branson, MO | Multi-tenant Retail | 210,201 | 9,667,000 | ||||||||||||||
12/16/14 | Copps Grocery Store | Stevens Point, WI | Single-tenant Retail | 69,911 | 15,544,261 | ||||||||||||||
12/16/14 | Fox Point Plaza | Neenah, WI | Multi-tenant Retail | 171,121 | 17,312,015 | ||||||||||||||
2,075,065 | $ | 378,762,651 | |||||||||||||||||
-1 | There is an earnout component associated with this acquisition that is not included in the purchase price (note 12) | ||||||||||||||||||
Additional information regarding the Company's acquisitions during the year | Property Name | Land | Building | Acquired | Acquired | Fair Value | Deferred | ||||||||||||
and Other | Lease | Below | Adjustment | Investment | |||||||||||||||
Improvements | Intangibles | Market | Related to | Property | |||||||||||||||
Lease | Mortgages and | Acquisition | |||||||||||||||||
Intangibles | Notes Payable | Obligations | |||||||||||||||||
/ Fair Value of | (note 12) | ||||||||||||||||||
Interest Rate | |||||||||||||||||||
Swap | |||||||||||||||||||
Park Avenue Shopping Center | $ | 5,500,000 | $ | 16,365,112 | $ | 2,972,500 | $ | -120,291 | $ | – | $ | -1,349,734 | |||||||
North Hills Square | 4,800,000 | 5,493,151 | 815,870 | -59,021 | – | – | |||||||||||||
Mansfield Pointe | 5,350,000 | 20,002,000 | 3,550,362 | -802,362 | – | – | |||||||||||||
MidTowne Shopping Center | 8,810,000 | 29,698,674 | 4,369,101 | -1,427,775 | – | – | |||||||||||||
Lakeside Crossing | 1,460,000 | 16,998,581 | 1,483,036 | -214,340 | – | -2,759,774 | |||||||||||||
Dogwood Festival | 4,500,000 | 41,865,000 | 3,746,782 | -1,422,936 | – | – | |||||||||||||
Pick N Save Center | 3,150,000 | 14,282,926 | 1,790,898 | – | – | -101,264 | |||||||||||||
Harris Plaza | 6,500,000 | 19,403,207 | 2,473,720 | -1,357,689 | – | – | |||||||||||||
Dixie Valley | 2,807,035 | 9,053,000 | 2,174,725 | -514,242 | – | -1,300,124 | |||||||||||||
Landing at Ocean Isle | 3,053,288 | 7,080,813 | 1,637,335 | -876,839 | – | – | |||||||||||||
Shoppes at Prairie Ridge | 7,520,950 | 22,467,724 | 4,989,895 | -2,155,989 | -295,307 | – | |||||||||||||
Harvest Square | 2,186,106 | 9,329,817 | 1,987,148 | -174,139 | -311,114 | – | |||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||||||
(a Maryland Corporation) | |||||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||||
Property Name | Land | Building | Acquired | Acquired | Fair Value | Deferred | |||||||||||||
and Other | Lease | Below | Adjustment | Investment | |||||||||||||||
Improvements | Intangibles | Market | Related to | Property | |||||||||||||||
Lease | Mortgages and | Acquisition | |||||||||||||||||
Intangibles | Notes Payable | Obligations | |||||||||||||||||
/ Fair Value of | (note 12) | ||||||||||||||||||
Interest Rate | |||||||||||||||||||
Swap | |||||||||||||||||||
Heritage Square | 2,028,048 | 5,538,036 | 1,882,398 | -101,204 | -336,749 | – | |||||||||||||
The Shoppes at Branson Hills | 4,418,273 | 37,229,338 | 6,839,490 | -5,115,245 | -568,826 | – | |||||||||||||
Branson Hills Plaza | 3,786,635 | 6,039,246 | 2,157,127 | -2,173,794 | -142,214 | – | |||||||||||||
Copps Grocery Store | 1,439,827 | 11,798,988 | 2,318,239 | -12,793 | – | ||||||||||||||
Fox Point Plaza | 3,517,622 | 12,680,398 | 3,141,833 | -1,857,137 | -170,701 | – | |||||||||||||
Total | $ | 70,827,784 | $ | 285,326,011 | $ | 48,330,459 | $ | -18,385,796 | $ | -1,824,911 | $ | -5,510,896 | |||||||
Condensed pro forma consolidated financial statement related to the acquisitions and financings | For the year ended December 31, 2014 | ||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 18,946,216 | $ | 23,298,529 | $ | 42,244,745 | |||||||||||||
Net income (loss) | $ | -4,355,606 | $ | 7,015,743 | $ | 2,660,137 | |||||||||||||
Net loss per common share, | $ | -0.21 | $ | 0.06 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 20,565,940 | 41,996,913 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||||||
(a Maryland Corporation) | |||||||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||||||
For the year ended December 31, 2013 | |||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 2,824,992 | $ | 34,222,410 | 37,047,402 | ||||||||||||||
Net income (loss) | $ | -2,526,801 | $ | 2,213,973 | -312,828 | ||||||||||||||
Net loss per common share, | $ | -1.18 | $ | -0.01 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 2,147,947 | 41,996,913 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
Previous year acquisitions data | Property Name | Land | Buildings and | Acquired | Acquired | Deferred | |||||||||||||
Improvements | Lease | Below | Investment | ||||||||||||||||
Intangibles | Market | Property | |||||||||||||||||
Lease | Acquisition | ||||||||||||||||||
Intangibles | Obligations | ||||||||||||||||||
(note 12) | |||||||||||||||||||
Wedgewood Commons | $ | 2,220,000 | $ | 26,577,237 | $ | 2,749,396 | $ | -391,214 | $ | -723,237 | |||||||||
Total | $ | 2,220,000 | $ | 26,577,237 | $ | 2,749,396 | $ | -391,214 | $ | -723,237 | |||||||||
Condensed pro forma consolidated financial statement for the years indicated | For the year ended December 31, 2013 | ||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 2,824,992 | $ | 2,921,682 | $ | 5,746,674 | |||||||||||||
Net loss | $ | -2,526,801 | $ | 1,242,846 | $ | -1,283,955 | |||||||||||||
Net loss per common share, | $ | -1.18 | $ | -0.19 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 2,147,947 | 6,745,615 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
For the year ended December 31, 2012 | |||||||||||||||||||
Historical | Pro Forma | As Adjusted | |||||||||||||||||
Adjustments | (unaudited) | ||||||||||||||||||
(unaudited) | |||||||||||||||||||
Total income | $ | 101,986 | $ | 982,051 | $ | 1,084,037 | |||||||||||||
Net loss | $ | -1,139,882 | $ | -923,515 | $ | -2,063,397 | |||||||||||||
Net loss per common share, | $ | -18.04 | $ | -0.31 | |||||||||||||||
basic and diluted | |||||||||||||||||||
Weighted average number of common | 63,198 | 6,745,615 | |||||||||||||||||
shares outstanding, basic and diluted | |||||||||||||||||||
Operating_Leases_Tables
Operating Leases (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Notes to Financial Statements | ||||||
Minimum lease payments to be received under operating leases | Minimum Lease | |||||
Payments | ||||||
2015 | $ | 31,474,798 | ||||
2016 | 30,042,208 | |||||
2017 | 27,235,679 | |||||
2018 | 25,082,866 | |||||
2019 | 20,576,136 | |||||
Thereafter | 120,994,092 | |||||
Total | $ | 255,405,779 |
Transactions_With_Related_Part1
Transactions With Related Parties (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | ||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||
Summarization of the Company's related party transactions for the period | Year ended December 31, | Unpaid amounts as of | ||||||||||||||||
2014 | 2013 | 2012 | December 31, | December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||||||
General and administrative: | ||||||||||||||||||
General and administrative | (a) | $ | 465,958 | $ | 267,510 | $ | 21,263 | $ | 137,988 | $ | 76,158 | |||||||
Reimbursements | ||||||||||||||||||
Affiliate share purchase discounts | (b) | 150,426 | 369,526 | – | – | – | ||||||||||||
Total general and administrative | $ | 616,384 | $ | 637,036 | $ | 21,263 | $ | 137,988 | $ | 76,158 | ||||||||
Expenses | ||||||||||||||||||
Acquisition related costs | (c) | $ | 4,209,459 | $ | 543,578 | $ | 558,375 | $ | 156,961 | $ | 1,044,214 | |||||||
Offering costs | (d) | 33,141,160 | 5,784,984 | 218,816 | 210,469 | 178,996 | ||||||||||||
Sponsor non-interest bearing advances | (e) | – | – | 1,080,000 | 1,630,000 | 1,630,000 | ||||||||||||
Real estate management fees | (f) | 630,571 | 80,691 | 2,254 | – | – | ||||||||||||
Business management fees | (g) | 773,244 | 226,280 | – | 558,234 | 226,280 | ||||||||||||
Sponsor contribution | (h) | 640,000 | – | – | – | – | ||||||||||||
(a) | The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses of the Business Manager and its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses to related parties in the accompanying consolidated statements of operations and other comprehensive loss. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
(b) | The Company established a discount stock purchase policy for related parties and related parties of the Business Manager that enables the related parties to purchase shares of common stock at $9.00 per share. The Company sold 150,426 and 369,526 shares to related parties during the year ended December 31, 2014 and 2013, respectively. | |||||||||||||||||
(c) | The Company will pay the Business Manager or its affiliates a fee equal to 1.5% of the “contract purchase price,” as defined, of each asset acquired. The Business Manager and its related parties are also reimbursed for acquisition and transaction related costs of the Business Manager and its related parties relating to the Company’s acquisition of real estate assets, regardless of whether the Company acquires the real estate assets, subject to limits, as defined. For the year ended December 31, 2014, the Business Manager permanently waived acquisition fees of $2,261,648. Such costs are included in acquisition related costs in the accompanying consolidated statements of operations and other comprehensive loss. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | ||||||||||||||||||
(a Maryland Corporation) | ||||||||||||||||||
Notes to Consolidated Financial Statements | ||||||||||||||||||
(d) | A related party of the Business Manager receives selling commissions equal to 7.0% of the sale price for each share sold and a marketing contribution equal to 3.0% of the gross offering proceeds from shares sold, the majority of which is re-allowed (paid) to third party soliciting dealers. The Company also reimburses a related party of the Business Manager and the soliciting dealers for bona fide, out-of-pocket itemized and detailed due diligence expenses in amounts up to 0.5% of the gross offering proceeds. The expenses are reimbursed from amounts paid or re-allowed to these entities as a marketing contribution. The Company will reimburse the Sponsor, its affiliates and third parties for costs and other expenses of the Offering that they pay on the Company’s behalf, in an amount not to exceed 1.5% of the gross offering proceeds from shares sold in the “best efforts” offering. The Company does not pay selling commissions or the marketing contribution or reimburse issuer costs in connection with shares of common stock issued through the DRP. Offering costs are offset against the stockholders’ equity accounts. Unpaid amounts are included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
(e) | As of December 31, 2014 and 2013, the Company incurred $43,594,427 and $9,023,148 of offering and organization costs, respectively, of which $1,630,000 was advanced by the Sponsor. Our Business Manager or its affiliates will pay or reimburse any organization or offering costs, including any issuer costs, that exceed 11.5% of the gross offering proceeds from shares sold in the “best efforts” offering over the life of the Offering. This advance is included in due to related parties in the accompanying consolidated balance sheets. | |||||||||||||||||
(f) | For each property that is managed by Inland National Real Estate Services, LLC, or its affiliates, collectively the Real Estate Managers, the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. Each Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by one of the Real Estate Managers or its affiliates, the Company pays the Real Estate Manager a separate leasing fee based upon prevailing market rates applicable to the geographic market of that property. Further, in the event that the Company engages its Real Estate Managers to provide construction management services for a property, the Company will pay a separate construction management fee in an amount that is usual and customary for comparable services rendered to similar projects in the geographic market of the project. The Company also reimburses each Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Managers and their affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer of any of the Real Estate Managers. Real estate management fees and reimbursable expenses are included in property operating expenses in the accompanying consolidated statements of operations and other comprehensive loss. | |||||||||||||||||
(g) | The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets,” as defined in the business management agreement, payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. For the year ended December 31, 2014, the Business Manager was entitled to a business management fee in the amount equal to $1,432,934, of which $433,410 was permanently waived by the Business Manager. In the three months ended March 31, 2014, the Business Manager also permanently waived business management fees of $226,280 incurred for the year ended December 31, 2013, which was included as a reduction of due to related parties in the accompanying consolidated balance sheets as of December 31, 2014. | |||||||||||||||||
(h) | During the year ended December 31, 2014, the Sponsor contributed $640,000 to the Company. Our Sponsor has not received, and will not receive, any additional shares of our common stock for making this contribution. There is no assurance that our Sponsor will continue to contribute any additional monies. |
Mortgages_And_Notes_Payable_Ta
Mortgages And Notes Payable (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Notes to Financial Statements | |||||||||||||||
Mortgages and notes payable outstanding data | Property Name | Stated Interest | Principal | Principal | Maturity Date | Notes | |||||||||
Rate Per Annum | Balance at | Balance at | |||||||||||||
December 31, | December 31, | ||||||||||||||
2014 | 2013 | ||||||||||||||
Dollar General Portfolio Phase I - five properties | 4.31% | $ | 3,340,450 | $ | 3,340,450 | 1-May-27 | (a),(b) | ||||||||
Newington Fair Shopping Center - Senior Tranche | 3 month LIBOR + 3.25% subject to a minimum rate of 3.50% | – | 9,790,000 | 27-Dec-15 | |||||||||||
Dollar General Portfolio Phase II - seven properties | 4.35% | 4,140,000 | 4,140,000 | 1-Oct-27 | (a),(c) | ||||||||||
Wedgewood Commons Shopping Center | 1 month LIBOR + 1.90% | 15,259,894 | 23-Dec-18 | (d),(e) | |||||||||||
15,259,894 | |||||||||||||||
North Hills Square | 1 month LIBOR + 1.80% | 5,525,000 | – | 28-Mar-19 | (d), (f) | ||||||||||
Mansfield Pointe | 1 month LIBOR + 1.80% | 14,200,000 | – | 7-May-19 | (d),(g) | ||||||||||
Park Avenue Shopping Center | 1 month LIBOR + 1.75% | 11,683,793 | – | 8-May-19 | (d),(h) | ||||||||||
Lakeside Crossing | 1 month LIBOR + 1.95% | 8,483,751 | – | 22-May-19 | (d),(i) | ||||||||||
Dogwood Festival | 1 month LIBOR + 1.75% | 24,351,750 | – | 1-Jul-19 | (d),(j) | ||||||||||
MidTowne Shopping Center | 1 month LIBOR + 1.95% | 20,725,000 | – | 5-Jul-19 | (d),(k) | ||||||||||
Pick N Save Center | 1 month LIBOR + 1.60% | 9,561,280 | – | 31-Jul-19 | (d),(l) | ||||||||||
The Shoppes at Branson Hills & Branson Hills Plaza | 1 month LIBOR + 1.75% | 20,240,000 | – | 15-Dec-19 | (d),(m) | ||||||||||
The Shoppes at Branson Hills – Kohl’s | 5.95% | 6,532,795 | – | 11-Nov-17 | (n) | ||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
Property Name | Stated Interest | Principal | Principal | Maturity Date | Notes | ||||||||||
Rate Per Annum | Balance at | Balance at | |||||||||||||
December 31, | December 31, | ||||||||||||||
2014 | 2013 | ||||||||||||||
Branson Hills Plaza – TJ Maxx | 5.78% | $ | 3,005,240 | $ | – | 11-May-16 | (n) | ||||||||
Harvest Square | 4.65% | 6,800,000 | – | 1-Jan-22 | (o) | ||||||||||
Shoppes at Prairie Ridge | 1 month LIBOR + 1.75% | 15,591,445 | – | 15-Dec-19 | (d),(p) | ||||||||||
Fox Point Plaza | 1 month LIBOR + 1.85% | 10,836,530 | – | 15-Dec-19 | (d),(q) | ||||||||||
Heritage Square | 5.10% | 4,460,000 | – | 1-Jul-21 | (o) | ||||||||||
$ | 184,736,928 | $ | 32,530,344 | (r) | |||||||||||
(a) | The Company’s Sponsor, IREIC, has guaranteed payment and performance of the debt in the event the Company fails to provide access or information to the properties or fails to obtain the lender’s prior written consent to any liens on or transfers of the properties, and in the event of any losses, costs or damages incurred by the lender as a result of fraud or intentional misrepresentation of any individual borrower, gross negligence or willful misconduct, material waste of the properties and the breach of any representation or warranty concerning environmental laws, among other things. The Company did not pay any fees or other consideration to our Sponsor for this guarantee. | ||||||||||||||
(b) | The loan requires monthly payments of interest only until December 1, 2019 (the “anticipated repayment date”). In the event the loan is not repaid as of the anticipated repayment date, the loan will bear interest at a rate equal to 3% per annum plus the greater of: (i) 4.313%; or (ii) the seven year swap yield as of the first business day after the anticipated repayment date; provided, however, that the revised interest rate may not exceed 9.31% per annum. In addition, the Company is required to make monthly payments of $18,000 until the maturity date. | ||||||||||||||
The loan may be prepaid in full, but not in part, any time after December 1, 2014, provided that if the prepayment occurs prior to September 1, 2019, the Company will be required to pay a prepayment premium equal to the greater of: (i) 1% of the outstanding principal balance of the loan; or (ii) the excess, if any, of: (a) the sum of the present values of all then-schedule payments of principal and interest under the loan documents, over (b) the principal amount being prepaid. Subject to satisfying certain conditions, as defined, the Company may prepay a portion of the loan equal to 120% of the portion of the loan allocated to a property and obtain the release of its property and the release of its related obligations under the loan documents. Assuming no payment has been made on principal in advance of the anticipated repayment date approximately $3,340,000 will be due on the anticipated repayment date. The loan is secured by cross-collateralized first mortgages on the five properties. | |||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
(c) | The loan requires monthly payments of interest only until January 1, 2020 (the “anticipated repayment date”). In the event the loan is not repaid as of the anticipated repayment date the loan will bear interest at a rate equal to 3% per annum plus the greater of: (i) 4.347%; or (ii) the seven year swap yield as of the first business day after the anticipated repayment date provided, however, that the revised interest rate may not exceed the 9.347% per annum. In addition, the Company will be required to make monthly payments of $22,653 until the maturity date. | ||||||||||||||
The loan may be prepaid in full, but not in part, any time after January 1, 2015, provided that if the prepayment occurs prior to October 1, 2019, the Company will be required to pay a prepayment premium equal to the greater of: (i) 1% of the outstanding principal balance of the loan; or (ii) the excess, if any, of: (a) the sum of the present values of all then-scheduled payments of principal and interest under the loan documents, over (b) the principal amount being prepaid. Subject to satisfying certain conditions, as defined, the Company may prepay a portion of the loan equal to 120% of the portion of the loan allocated to a property and obtain the release of its property and the release of its related obligations under the loan documents. The loan is secured by cross-collateralized first mortgages on the seven properties. | |||||||||||||||
(d) | The 1 month LIBOR rate at December 31, 2014 was 0.17%. | ||||||||||||||
(e) | The loan requires monthly payments of interest only until December 23, 2018 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. | ||||||||||||||
(f) | The loan requires monthly payments of interest only until March 28, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 4.02% beginning in year two through maturity. | ||||||||||||||
(g) | The loan requires monthly payments of interest only until May 7, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 3.90% beginning in year two through maturity. | ||||||||||||||
(h) | The loan requires monthly payments of interest only until May 8, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 3.90% beginning in year two through maturity. | ||||||||||||||
(i) | The loan requires monthly payments of interest only until May 22, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 3.95% beginning in year two through maturity. | ||||||||||||||
(j) | The loan requires monthly payments of interest only until July 1, 2019 when all principal and unpaid interest is due. Prior to January 1, 2017, the loan may not be prepaid in whole or in part. Thereafter, the loan may be prepaid with a prepayment premium of 2% of the principal amount from January 1, 2017 through July 1, 2017, 1% of the principal amount from July 2, 2017 through July 1, 2018 and at par after July 1, 2018. The Company entered into a swap which fixed the interest rate at 3.597%. | ||||||||||||||
(k) | The loan requires monthly payments of interest only until July 5, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a one year forward swap which fixed the interest rate at 4.06% beginning in year two through maturity. | ||||||||||||||
(l) | The loan requires monthly payments of interest only until July 31, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company entered into a swap which fixed the interest rate at 3.54%. | ||||||||||||||
(m) | The loan was assumed at acquisition and requires monthly payments of interest only until December 15, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company assumed a swap which fixed the interest rate at 2.88% on $10,150,000 until May 9, 2017. | ||||||||||||||
(n) | The loan was assumed at acquisition and requires monthly payments of principal and interest until the maturity date, on which date the outstanding principal balance of the loan plus all accrued and unpaid interest will be due. There is a prepayment premium associated with this loan. | ||||||||||||||
(o) | The loan was assumed at acquisition and requires monthly payments of interest only until maturity date, on which date the outstanding principal balance of the loan plus all accrued and unpaid interest will be due. There is a prepayment premium associated with this loan. | ||||||||||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||||
(a Maryland Corporation) | |||||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||||
(p) | The loan was assumed at acquisition and requires monthly payments of interest only until December 15, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company assumed a swap which fixed the interest rate at 3.72% on $13,358,984 until January 22, 2016. | ||||||||||||||
(q) | The loan was assumed at acquisition and requires monthly payments of interest only until December 15, 2019 when all principal and unpaid interest is due. The loan may be prepaid in whole or in part at any time, at par. The Company assumed a swap which fixed the interest rate at 3.35% until October 21, 2016. | ||||||||||||||
(r) | Excludes mortgage premiums of $1,296,646 and $0 as of December 31, 2014 and 2013, respectively. | ||||||||||||||
Scheduled maturities of mortgages and notes payable | Mortgages | Weighted | |||||||||||||
and Notes | Average Interest Rate | ||||||||||||||
Payable (1) | |||||||||||||||
2015 | $ | – | – | ||||||||||||
2016 | 3,005,240 | 5.78% | |||||||||||||
2017 | 6,532,795 | 5.95% | |||||||||||||
2018 | 15,259,894 | 2.07% | |||||||||||||
2019 | 141,198,549 | 2.71% | |||||||||||||
Thereafter | 18,740,450 | 4.63% | |||||||||||||
Total | $ | 184,736,928 | 3.02% | ||||||||||||
(1) Excludes mortgage premiums associated with debt assumed at acquisition of $1,296,646. | |||||||||||||||
Interest rate swap contracts outstanding as of the period indicated | Date | Effective | Maturity | Pay | Receive | Notional | Fair Value at | ||||||||
Entered | Date | Date | Fixed | Floating | Amount | December 31, | |||||||||
Rate | Rate Index | 2014 | |||||||||||||
28-Mar-14 | 1-Mar-15 | March 28, 2019 | 1 month | $ | 5,525,000 | $ | -149,215 | ||||||||
2.22% | LIBOR | ||||||||||||||
8-May-14 | 5-May-15 | 7-May-19 | 2.10% | 1 month | 14,200,000 | -264,692 | |||||||||
LIBOR | |||||||||||||||
23-May-14 | 1-May-15 | 8-May-19 | 2.00% | 1 month | 8,483,751 | -125,340 | |||||||||
LIBOR | |||||||||||||||
6-Jun-14 | 1-Jun-15 | 22-May-19 | 2.15% | 1 month | 11,683,793 | -225,944 | |||||||||
LIBOR | |||||||||||||||
26-Jun-14 | 5-Jul-15 | 5-Jul-19 | 2.11% | 1 month | 20,725,000 | -323,303 | |||||||||
LIBOR | |||||||||||||||
27-Jun-14 | 1-Jul-14 | 1-Jul-19 | 1.85% | 1 month | 24,351,750 | -340,835 | |||||||||
LIBOR | |||||||||||||||
31-Jul-14 | 31-Jul-14 | 31-Jul-19 | 1.94% | 1 month | 9,561,280 | -170,119 | |||||||||
LIBOR | |||||||||||||||
16-Dec-14 | 16-Dec-14 | 22-Jun-16 | 1.97% | 1 month | 13,358,984 | -280,834 | |||||||||
LIBOR | |||||||||||||||
16-Dec-14 | 16-Dec-14 | 21-Oct-16 | 1.50% | 1 month | 10,836,530 | -158,606 | |||||||||
LIBOR | |||||||||||||||
16-Dec-14 | 16-Dec-14 | 9-May-17 | 1.13% | 1 month | 10,150,000 | -50,452 | |||||||||
LIBOR | |||||||||||||||
Total | $ | 128,876,088 | $ | -2,089,340 | |||||||||||
Fair value of the Company's cash flow hedges and classification | 31-Dec-14 | 31-Dec-13 | |||||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | ||||||||||||
Location | Location | ||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||
Interest rate swaps | Other liabilities | $ | 2,089,340 | Other liabilities | $ | – | |||||||||
Effect of the Company's derivative financial instruments | Year Ended December 31 | ||||||||||||||
Derivatives in Cash Flow Hedging Relationships | 2014 | 2013 | |||||||||||||
Amount of Loss Recognized in OCL on Derivative (Effective Portion) | $ | -1,809,830 | $ | – | |||||||||||
Amount of Loss Reclassified from Accumulated OCL into Income (Effective Portion) | $ | 282,048 | $ | – | |||||||||||
Amount of Loss Recognized in Income on Derivative (Ineffective Portion) | $ | -426 | $ | – | |||||||||||
Year Ended December 31 | |||||||||||||||
Derivatives Not Designated as Hedging Instruments | 2014 | 2013 | |||||||||||||
Amount of Loss Recognized in Income on Derivative (Ineffective Portion) | $ | -32,867 | $ | – | |||||||||||
Fair_Value_Financial_Instrumen1
Fair Value Financial Instruments (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
Fair value for each major category of assets and liabilities | Fair Value Measurements at December 31, 2014 | |||||||||
Quoted Prices in | Significant | Significant | ||||||||
Active Markets | Other | Unobservable | ||||||||
for Identical | Observable | Inputs | ||||||||
Assets | Inputs | (Level 3) | ||||||||
(Level 1) | (Level 2) | |||||||||
Description | ||||||||||
Derivative interest rate instruments | $ | – | $ | -2,089,340 | $ | – | ||||
Total liabilities | $ | – | $ | -2,089,340 | $ | – |
Distributions_Tables
Distributions (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Notes to Financial Statements | ||||||||
Declared monthly distribution to its common stockholders | 2014 | 2013 | ||||||
Ordinary income | $ | 0.19 | $ | 0 | ||||
Nontaxable return of capital | 0.41 | 0.6 | ||||||
Commitments_And_Contingencies_
Commitments And Contingencies (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Notes to Financial Statements | |||||||
Table indicating the earnout liability for the period indicated | 2014 | 2013 | |||||
Earnout liability-beginning of period | $ | 723,237 | $ | – | |||
Increases: | |||||||
Acquisitions | 5,510,896 | 723,237 | |||||
Amortization expense | 167,226 | – | |||||
Decreases: | |||||||
Earnout payments | -2,789,740 | – | |||||
Other: | |||||||
Adjustments to acquisition related costs | 34,254 | – | |||||
Earnout liability – end of period | $ | 3,645,873 | $ | 723,237 |
Subsequent_Events_Tables
Subsequent Events (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Subsequent Events [Abstract] | |||||||||||||
Declared distributions payable | • | In January 2015, total distributions declared for the month of December 2014 were paid in the amount equal to $2,025,405, including $1,051,472 which was reinvested through the Company’s DRP, resulting in the issuance of an additional 110,681 shares of common stock. | |||||||||||
• | In February 2015, total distributions declared for the month of January 2015 were paid in the amount equal to $2,229,440, including $1,051,581 which was reinvested through the Company’s DRP, resulting in the issuance of an additional 121,114 shares of common stock. | ||||||||||||
• | In March 2015, total distributions declared for the month of February 2015 were paid in the amount equal to $2,212,069, including $1,141,640 which was reinvested through the Company’s DRP, resulting in the issuance of an additional 120,173 shares of common stock. | ||||||||||||
The Company purchased the following properties from unaffiliated third parties for the period indicated | Date Acquired | Property Name | Location | Square Footage | Purchase Price | Assumed Debt | |||||||
1/29/15 | The Shoppes at Lake Park | West Valley City, UT | 52,997 | $ | 11,587,000 | $ | – | ||||||
2/19/15 | Plaza at Prairie Ridge | Pleasant Prairie, WI | 9,035 | $ | 3,400,000 | $ | – | ||||||
3/13/15 | Green Tree Shopping Center | Katy, TX | 147,658 | $ | 26,244,094 | $ | – | ||||||
3/16/15 | Eastside Junction | Athens, AL | 79,700 | $ | 12,278,000 | $ | 6,270,000 | ||||||
3/16/15 | Prattville Town Center | Prattville, AL | 168,842 | $ | 33,329,000 | $ | 15,930,000 | ||||||
3/16/15 | Fairgrounds Crossing | Hot Springs, AR | 155,127 | $ | 29,197,000 | $ | 13,453,000 | ||||||
INLAND REAL ESTATE INCOME TRUST, INC. | |||||||||||||
(a Maryland Corporation) | |||||||||||||
Notes to Consolidated Financial Statements | |||||||||||||
Date | Property Name | Location | Square | Purchase Price | Assumed Debt | ||||||||
Acquired | Footage | ||||||||||||
3/16/15 | Regal Court | Shreveport, LA | 363,174 | $ | 50,364,000 | $ | – | ||||||
3/16/15 | Shops at Hawk Ridge | St. Louis, MO | 75,951 | $ | 12,721,000 | $ | – | ||||||
3/16/15 | Whispering Ridge | Omaha, NE | 69,676 | $ | 15,803,000 | $ | – | ||||||
3/16/15 | Walgreens Plaza | Jacksonville, NC | 42,219 | $ | 13,663,000 | $ | 4,650,000 | ||||||
Total shares sold in the offering detail | Shares | Gross Offering | Commissions | Proceeds to the | |||||||||
Proceeds | and Fees | Company, | |||||||||||
($) (1) | ($) (2) | Before Expenses | |||||||||||
($) (3) | |||||||||||||
From our Sponsor in connection | 20,000 | $ | 200,000 | – | $ | 200,000 | |||||||
with our formation | |||||||||||||
Shares sold in the offering | 57,154,967.21 | 568,580,837 | 53,643,114 | 514,937,723 | |||||||||
Shares sold pursuant to our | 970,353.03 | 9,218,353 | – | 9,218,353 | |||||||||
distribution reinvestment plan | |||||||||||||
Shares purchased pursuant to | -33,951.24 | -313,533 | – | -313,533 | |||||||||
our share repurchase program | |||||||||||||
Total: | 58,111,369.00 | $ | 577,685,657 | 53,643,114 | $ | 524,042,543 | |||||||
(1) | Gross proceeds received by us as of the date of this table for shares sold to investors pursuant to accepted subscription agreements. | ||||||||||||
-2 | Inland Securities Corporation serves as dealer manager of the Offering and is entitled to receive selling commissions and certain other fees, as discussed further in the prospectus for the “best efforts” offering dated October 18, 2012 as the same may be supplemented from time to time. | ||||||||||||
-3 | Organization and offering expenses, excluding commissions, will not exceed 1.5% of the gross offering proceeds. These expenses include registration and filing fees, legal and accounting fees, printing and mailing expenses, bank fees and other administrative expenses. |
Quarterly_Supplemental_Financi1
Quarterly Supplemental Financial Information (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Notes to Financial Statements | ||||||||||||
Quarterly supplemental financial information - unaudited | 2014 | |||||||||||
31-Dec | 30-Sep | 30-Jun | 31-Mar | |||||||||
Total income | $ | 7,659,205 | $ | 6,042,578 | $ | 3,510,325 | $ | 1,734,108 | ||||
Net loss | $ | -611,575 | $ | -816,622 | $ | -2,363,250 | $ | -564,159 | ||||
Net loss per common share, | $ | -0.02 | $ | -0.03 | $ | -0.18 | $ | -0.06 | ||||
basic and diluted (1) | ||||||||||||
Weighted average number of | 36,112,929 | 23,733,441 | 13,377,773 | 8,703,608 | ||||||||
common shares outstanding, | ||||||||||||
basic and diluted (1) | ||||||||||||
2013 | ||||||||||||
31-Dec | 30-Sep | 30-Jun | 31-Mar | |||||||||
Total income | $ | 731,912 | $ | 692,681 | $ | 711,252 | $ | 689,147 | ||||
Net loss | $ | -818,920 | $ | -395,666 | $ | -452,346 | $ | -859,869 | ||||
Net loss per common share, | $ | -0.17 | $ | -0.18 | $ | -0.43 | $ | -1.71 | ||||
basic and diluted (1) | ||||||||||||
Weighted average number of | 4,766,862 | 2,221,493 | 1,051,400 | 504,243 | ||||||||
common shares outstanding, | ||||||||||||
basic and diluted (1) | ||||||||||||
(1) | Quarterly net loss per common share amounts may not total the annual amounts due to rounding and the changes in the number of weighted common shares outstanding. |
Acquisitions_Details_Narrative
Acquisitions (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | |||
Purchase price of properties acquired during the year | $378,762,651 | ||
Financed portion of the properties acquired during the year | 161,996,584 | ||
Incurred expenses related to the acquisition, dead deal and transaction related costs | 5,139,511 | 666,042 | 732,739 |
Recorded revenue related to the property acquired during the year | 13,053,706 | 62,368 | |
Property net income (loss) related to the property acquired during the year | $2,551,593 | $49,133 |
Investment_In_Unconsolidated_E1
Investment In Unconsolidated Entity (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | |||
Allocated income | $10,679 | $7,126 | $0 |
Distributions_Details_Narrativ
Distributions (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | |||
Company declared cash distributions | $12,317,960 | $1,288,777 | $13,793 |
Commitments_And_Contingencies_1
Commitments And Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | ||
Maximum potential earnout payments | $4,785,682 | $723,237 |