DEFA14A: Inland Income Trust NAV Drops 11.9%; Reinstates DRP, SRP

Inland Real Estate Income Trust, Inc. announced an estimated per share net asset value of $16.89 as of September 30, 2025, representing an 11.9% decrease from the prior valuation, while also reinstating its distribution reinvestment and share repurchase programs.

Summary

• The estimated per share Net Asset Value (NAV) for common stock is $16.89 as of September 30, 2025.
• This NAV represents a decrease of $2.28, or approximately 11.9%, compared to the last NAV published as of December 31, 2023.
• The decrease in real estate asset value is largely attributed to higher discount rates, terminal capitalization rates, increased market interest rates, greater capital expenditure assumptions, and market uncertainty, including the effects of tariffs.
• The Board of Directors has decided not to pursue the sale of the Company at this time, following a review of strategic alternatives.
• The Company's Distribution Reinvestment Plan (DRP) will be reinstated effective February 1, 2026, with a purchase price of $16.89 per share.
• The Company's Share Repurchase Program (SRP) will also be reinstated effective February 1, 2026, with a purchase price of $13.51 (80% of NAV) for ordinary repurchases and repurchases for death or qualifying disability.
• The Board has requested the business manager to evaluate and present alternatives and enhancements to the business plan and strategy, aiming to increase assets and cash flow on an accretive basis, enhance capital, and provide liquidity to stockholders over time.
• As of September 30, 2025, the portfolio comprised 52 primarily grocery-anchored shopping centers, totaling approximately 7.2 million square feet, occupied by 813 tenants.

Sentiment

Score: 4

Explanation: The significant decrease in Net Asset Value (NAV) by nearly 12% due to market conditions and increased costs is a strong negative. While the reinstatement of DRP and SRP offers some liquidity and reinvestment options, and the company is reviewing its strategy, the core asset value decline overshadows these efforts. The decision not to sell the company also removes a potential near-term catalyst for shareholders.

Positives

• The reinstatement of the Distribution Reinvestment Plan (DRP) provides an option for shareholders to reinvest distributions at the new NAV.
• The reinstatement of the Share Repurchase Program (SRP) offers a liquidity mechanism for shareholders, particularly for death or qualifying disability.
• The Board is actively evaluating the business plan and strategy to increase assets and cash flow on an accretive basis, and enhance capital and provide liquidity to stockholders over time.
• The valuation methodology used by SitusAMC was compliant with the Institute for Portfolio Alternatives (IPA) Valuation of Non-Listed REITs Practice Guide and the Uniform Standards of Professional Appraisal Practice (USPAP).

Negatives

• The estimated per share Net Asset Value (NAV) decreased by $2.28, or approximately 11.9%, to $16.89 as of September 30, 2025, compared to December 31, 2023.
• The decrease in NAV is primarily due to higher market interest rates, greater capital expenditure assumptions, and general market uncertainty, including the effects of tariffs.
• The Company decided not to pursue the sale of the Company at this time, after reviewing strategic alternatives, which may disappoint some investors seeking an exit.
• A decrease in cash and other assets, net of other liabilities, primarily due to a decrease in the value of interest rate swap derivatives.

Risks

• The estimated per share NAV is inherently imprecise and susceptible to uncertainty and changes in circumstances, including changes to the value of individual assets, real estate and capital markets, interest rates, and the composition of the Company's portfolio.
• General economic conditions such as persistently high inflation and increasing interest rates pose risks.
• Competition from internet retailers with the Company's tenants for sales revenue is a risk factor.
• Unforeseen events affecting the commercial real estate industry, retail real estate, or particular markets could impact performance.
• Market uncertainty, including the effects of tariffs, contributes to valuation risks.
• The Company cannot assure that expectations reflected in forward-looking statements will prove to be correct, and actual results may vary materially.

Future Outlook

The Board has asked the Company's business manager to evaluate and present alternatives and enhancements to the business plan and strategy. The Company's goal is to increase assets and cash flow on an accretive basis, enhance capital, and provide liquidity to stockholders over time.

Management Comments

• "The Company believes that the decrease in the value of the real estate assets was largely attributable to an increase in the discount rates and terminal capitalization rates primarily because of higher market interest rates, greater capital expenditure assumptions and market uncertainty, including the effects of tariffs."
• "The Board has asked the Companys business manager to evaluate the business plan and related strategy and to consider and present alternatives and enhancements to this plan and strategy for Board review. The Companys goal is to increase assets and cash flow on an accretive basis as well as enhance capital and provide liquidity to stockholders over time."

Industry Context

The decrease in Inland Real Estate Income Trust's NAV is explicitly linked to broader market trends, including higher market interest rates, increased capital expenditure assumptions, and general market uncertainty, such as the effects of tariffs. These factors are currently impacting the valuation of real estate assets across the industry, particularly for retail properties. The decision not to sell the company suggests a belief in the long-term value of its grocery-anchored portfolio despite these current market headwinds.

Comparison to Industry Standards

• The NAV analysis, including the estimated range of per share NAV, was developed in compliance with the Institute for Portfolio Alternatives (IPA) Valuation of Non-Listed REITs Practice Guide effective May 1, 2013.
• The underlying property appraisals were completed in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the Code of Professional Ethics and Standards of Professional Practice of the Appraisal Institute.

Stakeholder Impact

• Shareholders: Experience a significant decrease in the estimated value of their shares (NAV down 11.9%). However, the reinstatement of the DRP and SRP provides options for reinvestment and liquidity, albeit at a lower valuation. The decision not to sell the company removes a potential near-term exit strategy.
• Management/Board: Tasked with evaluating and enhancing the business plan to increase assets, cash flow, and provide liquidity over time, indicating pressure to improve performance.

Next Steps

• The Board has asked the Company's business manager to evaluate the business plan and related strategy and to consider and present alternatives and enhancements for Board review.
• Fourth quarter account statements, reflecting the new estimated NAV per share, will be mailed in January 2026.
• The Distribution Reinvestment Plan (DRP) and Share Repurchase Program (SRP) will be reinstated effective February 1, 2026.

Key Dates

Recommendation

The significant 11.9% decrease in Net Asset Value (NAV) is a clear negative, reflecting challenging market conditions with higher interest rates and capital expenditure assumptions. While the reinstatement of the Distribution Reinvestment Plan (DRP) and Share Repurchase Program (SRP) offers some avenues for liquidity and reinvestment, these are at a reduced valuation. The decision not to pursue a sale at this time removes a potential near-term catalyst for shareholders seeking an exit. The company's commitment to evaluating its business plan for accretive growth and enhanced liquidity is a positive long-term signal, but current headwinds suggest a 'hold' position while awaiting concrete results from the strategic review and market stabilization.

Keywords

Inland Real Estate Income Trust, NAV, Net Asset Value, REIT, Real Estate, Distribution Reinvestment Plan, Share Repurchase Program, Commercial Real Estate, Shopping Centers, Grocery-Anchored, Valuation, Strategic Alternatives, Interest Rates, Capital Expenditure, Market Uncertainty, Tariffs