Q4 2021 Inventrust Properties Corp Earnings Call
Speaker 1: Thank you for standing by and welcome to the InvenTrust fourth quarter 2021 earnings conference call. As a reminder, this call is being recorded. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Thank you for standing by and welcome to the Inventrices fourth quarter 2021 earnings conference call.
As a reminder, this call is being recorded.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
Speaker 1: After today's presentation, there will be an opportunity to ask questions.
After todays presentation, there will be an opportunity to ask questions.
Speaker 1: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.
To ask a question you May press Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Speaker 1: I would now turn the conference over to Mr. Dan Lombardo, Vice President of Investor Relations. Please go ahead.
I would now turn the conference over to Mr. Dan Lombardo, Vice President of Investor Relations. Please go ahead.
Yeah.
Speaker 2: Thank you, operator. Good morning and welcome to Invent Trust Properties' fourth quarter 2021 earnings conference call. Joining me on the call today are DJ Bush, President and Chief Executive Officer, Mike Phillips, Chief Financial Officer, Christy David, Chief Operating Officer and General Counsel, and Dave Heimburger, Chief Investment Officer.
Thank you operator, good morning, and welcome to invent Trust properties fourth quarter 2021 earnings Conference call. Joining me on the call today are D. J Busch, President and Chief Executive Officer, Mike Phillips, Chief Financial Officer, Christy, David Chief Operating Officer, and General Counsel, and Dave <unk>, our chief investment.
Officer.
Speaker 2: Before the team starts with their prepared remarks, I would like to remind everyone that today's discussion may contain forward-looking statements about the company's views on the future of our business and financial performance, including forward-looking earnings guidance and future market conditions.
Before the team starts with their prepared remarks, I would like to remind everyone that today's discussion may contain forward looking statements about the company's views on the future of our business and financial performance, including forward looking earnings guidance and future market conditions.
Speaker 2: These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. Any forward-looking statements speak only as of today's date and we assume no obligation to update any forward-looking statements made on today's call or that are in the quarterly Financial Supplemental or Press Release.
These are based on management's current beliefs and expectations and are subject to various risks and uncertainties any forward looking statements speak only as of today's date and we assume no obligation to update any forward looking statements made on today's call are that are in the quarterly financial supplemental or press release.
Speaker 2: These factors and risks are described in more detail in our filings with the SEC.
These factors and risks are described in more detail in our filings with the SEC.
Speaker 2: In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earning materials, which are posted on our Investor Relations website. With that, I will turn the call over to DJ. Thanks, Dan.
In our discussion today, we will also reference certain non-GAAP financial measures the comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website.
With that I will turn the call over to D. J.
Thanks, Dan Good morning, everyone and thank you for joining US today 2021 was a year of milestones for adventurous where expectations were surpassed on many fronts. We executed on several corporate activities that lead to a successful listing on the New York stock Exchange in October of last year, which provided immediate liquidity alternative for all of our shareholders by year end our investment thesis.
Speaker 3: 2021 was a year of milestones for Inventrust, where expectations were surpassed on many fronts. We executed on several corporate activities that led to a successful listing on the New York Stock Exchange in October of last year, which provided immediate liquidity alternative for all of our shareholders.
Speaker 3: By year end, our investment thesis gained traction, giving the increased transition to a more institutional shareholder base.
Traction given the increased transition to a more institutional shareholder base.
Speaker 3: When I look back at all that we accomplished for our shareholders, employees, our tenants and communities, I'm extremely proud of the Inventoress team.
I look back at all that we accomplished for our shareholders employees, our tenants and communities I'm extremely proud of the inventor is team.
Speaker 3: The foundation of our success is built on Inventra's simple and focused strategy to own and operate high-quality, necessity-based shopping centers in the Sunbelt, paired with a conservative balance sheet with ample liquidity to fund future cash flow growth.
The foundation of our success is built on inventor of simple and focused strategy to own and operate high quality necessity based shopping centers in the sunbelt paired with a conservative balance sheet with ample liquidity to fund future cash flow growth and.
Speaker 3: Venturist leads the retail sector in Sunbelt Concentration and is one of the most focused retail portfolios in our space.
In Ventura sleeves, the retail sector and sunbelt concentration and it's one of the most focused retail portfolios in our space. The portfolios attractive demographic characteristics are expected to create strong leasing demand and organic growth at our markets continued to drive our high performing grocery anchor tenants also play a critical role. These necessity based tenants are.
Speaker 3: The portfolio's attractive demographic characteristics are expected to create strong leasing demand and organic growth as our markets continue to thrive. Our high-performing grocery-anchored tenants also play a critical role. These necessity-based tenants are aligned with the current consumer shift towards essentialism and are resilient across economic cycles. Over 86% of Ventura's NOI is derived from centers with a grocery presence.
We're aligned with the current consumer shift towards the centralism and a resilient across economic cycles over 86% of interest NOI is derived from centers with a grocery presence as our tenants continue to refine their multichannel strategies through physical locations last mile concepts and pick up at store inventors will support them in their endeavors.
Speaker 3: As our tenants continue to refine their multi-channel strategies through physical locations, last mile concepts, and pick up at store, the inventress will support them in their endeavors.
Speaker 3: I also want to quickly touch on another one of Inventra's key pillars, sustainability and corporate responsibility. We are focused on effectively managing our business and assets to reduce our environmental impact and implementing initiatives to play our part in a lower carbon future.
I also want to quickly touch on another one of inventor us key pillars sustainability and corporate responsibility. We are focus on effectively managing our business and assets reduce our environmental impact and implementing initiatives to play our part in a lower carbon future E.
Speaker 3: ESG is not new at Inventress. We've been a participant in the Global Real Estate Sustainability Benchmark, or GREZ, assessment since 2013 and something we have integrated into all aspects of our business. In 2022, the leadership team will continue to drive ESG initiatives and targets across the portfolio. And we look forward to sharing these results in our inaugural corporate responsibility report being released later this year.
ESG is not new at inventor us we've been a participant in the global real estate sustainability benchmark or grasp.
Assessments since 2013, and something we are integrated into all aspects of our business in 2022 of the leadership team will continue to drive ESG initiatives and targets across the portfolio and we look forward to sharing these results and our inaugural corporate responsibility report being released later this year.
Speaker 3: Lastly, our balance sheet remains a cornerstone for our growth story moving forward. To that end, we announced earlier this week that we closed on two premier properties in Austin, Texas for approximately $190 million. These acquisitions, which Dave will discuss in a bit, are great additions to our portfolio and will increase our concentration in Austin, already our largest market.
Lastly, our balance sheet remains a cornerstone for our growth story moving forward to that end, we announced earlier. This week, we closed on two premier properties in Austin, Texas for approximately $190 million. These.
These acquisitions, which Dave will discuss in a bit are great additions to our portfolio and will increase our concentration in Austin already our largest market.
Speaker 3: This transaction also satisfies about half of our two-year net acquisition target and will bring significant cash flow into the portfolio. With that, I'm going to turn it over to Mike to discuss our financial results. Mike?
This transaction also satisfies about half of our two year net acquisition target and will bring significant cash flow into the portfolio.
With that I'm going to turn it over to Mike to discuss our financial results Mike.
Speaker 4: Thanks, DJ, and good morning, everyone. I'll provide you with some color around our fourth quarter and full year results and walk you through our 2022 full year guidance.
Thanks, TJ and good morning, everyone I'll provide you with some color around our fourth quarter and full year results and walk you through our 2022 full year guidance to start we remain encouraged by our continued improvement in our portfolio operating trends.
Speaker 4: To start, we remain encouraged by our continued improvement in our portfolio operating trends.
Speaker 4: Ventrust produced $0.14 per share of NAREDFFO in the fourth quarter and $1.18 per share for the full year 2021.
And Vince just produce 14 cents per share of NAREIT <unk> in the fourth quarter and $1 18 per share for the full year 2021 .
Speaker 4: Our NARED FFO was above the high end of our 2021 guidance range of $1.13 per share due to savings on one-time direct listing costs in the fourth quarter.
Our NAREIT <unk> was above the high end of our 2021 guidance range of $1 13 per share due to savings on onetime direct listing costs in the fourth quarter and.
Speaker 4: Ventrust generated 38 cents per share of Core FFO in the fourth quarter flat over the same time period last year. For the full year 2021, our Core FFO was $1.40 per share, an increase of 3.7% over last year.
And Vince just generated 38 cents per share of corvo and the fourth quarter flat over the same time period last year for the full year 2021 or core <unk> was $1 40 per share an increase of 3.7% over last year.
Speaker 4: Our pro rata same property NOI for the quarter reached $37.9 million, growing 3.1%. Our full year results totaled $144.8 million, up 4.4% compared to 2020. The increase in pro rata same property NOI was primarily driven by contractual rent increases from our existing leases, new rent coming online, and collection of prior period rental income generating approximately 220 basis points of growth.
Our pro rata same property NOI for the quarter reached $37.9 million growing three 1% our full year results totaled a $144.8 million up 4.4% compared to 2020. The increase in pro rata same property NOI was primarily driven by contractual rent increases from our existing leases newmar.
<unk> coming online and collection of prior period rental income generating approximately 220 basis points of growth.
Speaker 4: Turning to the balance sheet and our strong capital structure, at quarter end we had $398 million of total liquidity, including $319 million of capacity remaining on a revolving credit facility and over $79 million of cash on hand.
Turning to the balance sheet and our strong capital structure at quarter end, we had $398 million of total liquidity, including $319 million of capacity remaining on our revolving credit facility and over $79 million of cash on hand.
Speaker 4: During the quarter, using cash on hand, we executed a $100 million Dutch tender, which we completed in November , where we repurchased 4 million shares at a price of $25 per share.
During the quarter using cash on hand, we executed $100 million Dutch tender, which we completed in November where we repurchased 4 million shares at a price of $25 per share.
Speaker 4: We have only $22 million in debt maturities in 2022, and we ended the year with our net leverage at 22%.
We have only $22 million in debt maturities in 2020 , two and we ended the year with our net leverage at 22%.
Speaker 4: Our trailing 12-month net debt to adjusted EBITDA is now at $4.6 billion.
Our trailing 12 month net debt to adjusted EBITDA is now at 4.6 times subs.
Speaker 4: Subsequent to quarter end, we drew on our revolving credit facility to partially fund the Austin portfolio acquisition.
Subsequent to quarter end, we drew on our revolving credit facility to partially fund the Austin portfolio acquisition.
Speaker 4: We also paid our Q4 2021 dividend, which represented an increase of 5% over the prior quarter. Our annualized dividend rate is now
We also paid our Q4 2021 dividend, which represented an increase of 5% over the prior quarter.
Our annualized dividend rate is now 82 cents per share.
Speaker 4: As mentioned in our earnings release, our guidance for 2022 is as follows.
As mentioned in our earnings release, our guidance for 2022 is as follows.
Speaker 4: For the year, we expect net income per diluted share of $0.13 to $0.19.
For the year, we expect net income per diluted share of 13 to 19 cents.
Speaker 4: We are providing NARED FFO guidance of $1.53 to $1.59 per share.
We are providing NAREIT <unk> guidance of $1 53 to $1 59 per share.
Speaker 4: We expect core FFO of $1.50 to $1.56 per share, representing a high single digit to low double digit growth over 2021.
We expect core of F O of $1 50 to $1 56 per share representing a high single digit to low double digit growth over 2020 one.
Speaker 4: Pro Rata Same Property NOI is expected to be in the range of 2.75% to 4.75%, and additional assumptions are provided in our supplemental disclosure. With that, I'm going to turn the call over to Dave to discuss our recent transaction activity.
Pro rata same property NOI is expected to be in the range of 2.75% to 4.75% and additional assumptions are provided in our supplemental disclosure with that I'm going to turn the call over to Dave to discuss our recent transaction activity Dave.
Speaker 5: Thank you, Mike. As DJ discussed, we're extremely excited to be adding two Austin assets into our portfolio. The assets further add to our presence as one of the largest institutional owners of open-air shopping centers in Austin. The two properties total just over 125 acres in Southwest Austin, which is one of the most dynamic and highly coveted sub-markets in the country with significant barriers to entry.
Thank you Mike as D. J discussed we're extremely excited to be adding to Austin assets into our portfolio. The assets further add to our presence as one of the largest institutional owners of open air shopping centers in Austin. The two properties totaled just over 125 acres in southwest Austin, which is one of the most dynamic and highly coveted submarkets in the car.
With significant barriers to entry.
Speaker 5: The Shops at Arbor Trails is an ultra-rare dual grocery anchored center with Costco and Whole Foods both on a lease, as well as an outstanding lineup of complimentary tenants with over 350,000 square feet and 99% leased occupancy.
The shops at Arbitrators is an ultra rare dual grocery anchored center with Costco and whole foods bolt on a lease as well as an outstanding lineup of complementary tenants with over 350000 square feet and 99% leased occupancy.
Speaker 5: Scarpin Village is anchored by HEB, the region's dominant grocer, also on a lease. It is 100% leased with over 167,000 square feet of GLA. Not only is this portfolio comprised of irreplaceable real estate with some of the best tenants in the market, both centers have components of ESG, including solar panels, water reclamation, a green roof, and electric vehicle charging stations, all of which match criteria we are actively looking for in future acquisitions.
Escarpment village is anchored by HEB the regions dominant grocer also on a lease is 100% leased with over 167000 square feet of GLA not only is this portfolio comprised of irreplaceable real estate with some of the best tenants in the market both centers have components of ESG, including solar panels water reclamation.
A green roof and electric vehicle charging stations as all of which match criteria. We are actively looking for in future acquisitions.
Speaker 5: Overall, this transaction demonstrates our team's ability to identify assets fitting our Sunbelt strategy and execute in a highly competitive market. Our significant presence in Austin and track record across numerous transactions allowed us to unlock this off-market opportunity and bring meaningful cash flow growth to our portfolio. As DJ noted, the purchase price for both Austin properties was approximately $190 million.
Overall this transaction demonstrates our team's ability to identify assets fitting our sunbelt strategy and execute in a highly competitive market our significant presence in Austin and track record across numerous transactions allowed us to unlock this off market opportunity and bring meaningful cash flow growth chart portfolio as D. J noted the purchase.
For both Austin properties was approximately $190 million.
Speaker 5: Our commitment to delivering portfolio cash flow growth in the Sunbelt will continue to differentiate us in our sector. We believe the Sunbelt's business-friendly environment, growing tech sector, and in-migration will drive demographic growth that will continue to afford us compelling investment opportunities in the future. Whether it's Texas, California, Atlanta, Central or South Florida, or the Carolinas, we maintain a robust pipeline of potential targets in our core Sunbelt markets and continue to explore other prospects.
Our commitment to delivering portfolio cash flow growth in the sunbelt will continue to differentiate us in our sector. We believe the sunbelt business friendly environment growing tech sector and in migration will drive demographic growth that will continue to afford us compelling investment opportunities in the future, whether it's Texas, California, Atlanta Central or South Florida.
Or the Carolinas, we maintain a robust pipeline of potential targets in our core sunbelt markets and continue to explore other prospects as well as opportunities to further round out our portfolio base and leverage our operational presence in these markets and with that Christie will discuss our portfolio performance.
Speaker 5: as well as opportunities to further round out our portfolio base and leverage our operational presence in these markets. And with that, Christy will discuss our portfolio.
Speaker 6: Thank you, Dave. Including the new Austin assets, InvenTrust owns 64 neighborhood, community and necessity-based power centers, totaling $10.8 million of TLA.
Thank you Dave.
The new Asta asset and then trust 64 neighborhood community and necessity based power centers totaling $10 8 million of GLA.
Speaker 6: Our assets are the backbone of their communities, with tenants providing essential products and services. These tenants draw strong foot traffic, which enhances our ability to increase rents and provide an attractive last-mile solution for omni-channel strategies.
Our assets are the backbone of their communities with tenants, providing essential products and services.
These tenants drive strong foot traffic, which enhances our ability to increase rents and providing attractive last mile solution for Omnichannel strategy.
Speaker 6: At the end of 2021, our lease occupancy was 93.9%, up from 92.8% at the end of 2020 and up 40 basis points from the third quarter of 2021. Our anchor lease percentage was 96.7% and small shops was 89%, increases of 120 and 130 basis points year-over-year respectively.
At the end of 2021 are leased occupancy was 93, 9% up from 92, 8% at the end of 2020 and up 40 basis points from the third quarter of 2021, our anchor lease percentage was 96, 7% and small shops with 89% increases at the Hunter in 'twenty and 130 basis point.
Year over year, respectively. We expect continued upside in our occupancy levels. As we look ahead through 2022, especially in the small shop category.
Speaker 6: We expect continued upside in our occupancy levels as we look ahead through 2022, especially in the small shop.
Speaker 6: As always, occupancy gains start with leasing execution. We are very pleased with our leasing activity and the deal pipeline being generated by our local...
As always occupancy gains start with leasing execution, we are very pleased with our leasing activity and the deal pipeline being generated by our local teams.
Speaker 6: We continue to see strong demand across the board with interest from tenants in many categories including medical, fitness, and fast-casual restaurant concepts from tenants such as Chipotle, First Watch, and Planet Fitness.
We continue to see strong demand across the board with interest from tenants in many categories, including medical fitness and fast casual restaurant concepts from tenants such as Chipotle first watch and planet fitness.
Speaker 6: In the fourth quarter, we signed 72 leases totaling approximately 252,000 square feet of GLA. Our blended comparable lease spreads for the quarter were 4.1%. We will note that our new lease spread did go back slightly for the quarter, but this is primarily driven by one lease out of a relatively small sample size of seven new deals in the quarter.
In the fourth quarter, we signed 72 leases totaling approximately 292000 square feet of GLA or blended comparable lease spreads for the quarter were 4.1%.
We will note that our newly spread could go back slightly for the quarter, but this is primarily driven by one lease out of a relatively small sample size of seven new deals in the quarter.
Speaker 6: The leasing environment remains healthy as it relates to both new concepts and well-established tenants looking for space in our centers. With that said, we continue to monitor the ongoing labor shortages and supply chain challenges being experienced throughout the economy. At this time, in general, our tenants have been able to adapt to these recent challenges and have not experienced any significant disruptions to their operations.
The leasing environment remains healthy as it relates to both new concepts and well established tenants looking for space in our centers with that said, we continue to monitor the ongoing labor shortages and supply chain challenges being experienced throughout the economy. At this time in general our tenants have been able to adapt to these recent challenges and have not experienced any significant disruptions.
To their operation.
Speaker 6: Annual base rent as of December 31st for the ProRata combined portfolio was $18.59, an increase of 2.1% compared to the same period in 2020.
Annual base rent as of December 31st for the pro rata combined portfolio with $18.59, an increase of 2.1 per cent compared to the same period in 2020.
Speaker 6: Anchor tenant ABR was $12.31 and small shop ABR was $31.42.
Anchor tenant a b R $12.31 and small shop ABR with $31 42.
Speaker 7: Regarding our active development projects, our Publix redevelopment and property improvements at Suncrest Village in Orlando are under construction and on track to open in summer of 2022.
Regarding our active development projects, our publics redevelopment and property improvement at Sunquest village in Orlando are under construction and on track to open in summer of 2022.
Speaker 6: Our Houston asset, Cypher Town Center, is undergoing a property refresh and is on track to be completed in the third quarter of 2022 and is already generating significant leasing interest at the property.
Our Houston asset size of our town center is undergoing a property refresh and is on track to be completed in the third quarter of 2022 and is already generating significant interest at the property.
Speaker 6: Demand for pad locations in our portfolio remains strong. We executed a lease with Chipotle for a freestanding building at our Eldridge Town Center property located in Houston. Our teams continue to evaluate opportunities within our portfolio to meet the growing trend and demand for drive-thru locations.
Demand for pad locations in our portfolio remained strong we executed a lease with chipotle for a freestanding building at our Eldridge Town Center property located in Houston, our teams continue to evaluate opportunities within our portfolio to meet the growing trend in demand for drive through locations.
Speaker 6: As a reminder, a redevelopment thesis is conservative, with no large mixed-use projects, major funding commitments, or long-dated construction time.
As a reminder, our redevelopment thesis is conservative with no large mixed use project major funding commitments are long dated construction timelines, we remain focused on identifying opportunities that allow us to reinvest in our centers at attractive returns in a disciplined way.
Speaker 6: We remain focused on identifying opportunities that allow us to reinvest in our centers at attractive returns in a disciplined way. Now I'll turn the call over to.
Now I'll turn the call over to TJ for some final remarks.
Speaker 3: Thanks, Christy. Inventorist has been a publicly traded company for a little over three months now. Since our listing in October , our simple and focused narrative has resonated with several institutions, and we continue to build these relationships.
Thanks, Christie and Ventas has been a publicly traded company for a little over three months now since our listing in October are simple and focused narrative has resonated with several institutions and we continue to build these relationships.
Speaker 3: The company also has been added to several real estate and REIT indices and we are hopeful that the trend will continue throughout 2022. We are off to a solid start in our journey as a traded company, but we are certainly not satisfied. The onus is on us to be transparent, available, and proactive in our investor and analyst outreach. Communicating our strategy and progress on our goals will be a focus and we plan to build on the strong momentum we have been able to create in the first few months since our listing.
The company also has been added to several real estate and REIT indices, and we're hopeful that the trend will continue throughout 2022, we're off to a solid start in our journey as a trading company, but we're certainly not satisfied.
The onus is on us to be transparent available and proactive in our investor and analyst outreach communicating our strategy and progress on our goals will be a focus and we plan to build on the strong momentum we've been able to create in the first few months since our listing.
Speaker 3: Our assets are well-positioned to benefit from the long-term Sunbelt migration trends. Our talented and deep team is focused on continuing to successfully execute our strategy to capture the substantial opportunities ahead in our business. I look forward to continuing to share updates of our progress.
Our assets are well positioned to benefit from the long term sunbelt migration trends are talented and deep team is focused on continuing to successfully execute our strategy to capture the substantial opportunities ahead in our business.
I look forward to continuing to share updates of our progress.
Speaker 3: Operator, this concludes our prepared remarks. Please open the line for questions.
Operator. This concludes our prepared remarks, please open the line for questions.
Speaker 1: There appear to be no questions at this time, so I would like to turn the conference back over to D.J. Bush for any closing remarks.
There appear to be no questions. At this time, so I would like to turn the conference back over to D. J Busch for any closing remarks.
Speaker 3: Thanks, operator. If there are any follow up questions, please feel free to reach out to Dan Lombardo and our investor relations team, and we'd be very happy to discuss further. Have a wonderful weekend.
Thanks, operator, if there are any follow up questions. Please feel free to reach out to Dan Lombardo, and our Investor relations team and wed be very happy to discuss further.
Have a wonderful weekend.
Yeah.
Speaker 1: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Yeah.
Speaker 8: Bye Bye.
Yeah.
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Yeah.
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