InvenTrust Properties (IVT) - 2021 Q1 - Quarterly Report

Part I - Financial Information This section provides a comprehensive overview of InvenTrust Properties Corp.'s financial performance and position, including detailed statements and explanatory notes Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for InvenTrust Properties Corp., including the balance sheets, statements of operations and comprehensive income (loss), statements of equity, and statements of cash flows, along with accompanying notes for the periods ended March 31, 2021, and December 31, 2020 Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total assets | $2,338,289 | $2,407,339 | | Total liabilities | $609,267 | $668,476 | | Total stockholders' equity | $1,729,022 | $1,738,863 | - Total assets decreased by $69.05 million from December 31, 2020, to March 31, 2021, primarily due to a decrease in cash and cash equivalents and net investment properties[9] - Total liabilities decreased by $59.21 million, mainly driven by a reduction in debt, net[9] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This statement details the company's revenues, expenses, and net income or loss over specific reporting periods | Metric | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total income | $51,121 | $52,438 | | Total operating expenses | $48,180 | $44,914 | | Net loss | $(100) | $(3,486) | | Comprehensive income (loss) | $2,841 | $(17,772) | - Net loss significantly improved from $(3.486) million in Q1 2020 to $(0.1) million in Q1 2021, largely due to the absence of a provision for asset impairment and lower interest expense[12] - Total income decreased by $1.317 million, while total operating expenses increased by $3.266 million year-over-year[12] Condensed Consolidated Statements of Equity This statement outlines changes in the company's equity accounts, including net income, distributions, and stock-based compensation | Metric | March 31, 2021 (in thousands) | March 31, 2020 (in thousands) | | :----------------------------------- | :---------------------------- | :---------------------------- | | Total Stockholders' Equity (End of Period) | $1,729,022 | $1,788,123 | | Net Loss | $(100) | $(3,486) | | Distributions Declared | $(14,065) | $(13,678) | | Stock-based Compensation, net | $1,383 | $201 | - Total stockholders' equity decreased by $9.841 million from January 1, 2021, to March 31, 2021, primarily due to net loss and distributions declared, partially offset by unrealized gains on derivatives and stock-based compensation[15] Condensed Consolidated Statements of Cash Flows This statement categorizes cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | $20,846 | $16,898 | | Net cash used in investing activities | $(4,490) | $(38,499) | | Net cash (used in) provided by financing activities | $(64,087) | $95,215 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(47,731) | $73,614 | - Operating cash flow increased by $3.948 million, while investing activities saw a significant reduction in cash outflow, primarily due to no property acquisitions in Q1 2021 compared to $32.4 million in Q1 2020[18][153][155] - Financing activities shifted from a net cash inflow of $95.215 million in Q1 2020 to a net cash outflow of $(64.087) million in Q1 2021, mainly due to debt payoffs and reduced proceeds from debt[18][156] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Organization This note describes InvenTrust Properties Corp.'s business, operational structure, and the impact of the COVID-19 pandemic - InvenTrust Properties Corp. operates as a Real Estate Investment Trust (REIT) focused on owning, managing, acquiring, and developing a multi-tenant retail platform, primarily grocery-anchored centers[24][25] | Retail Portfolio | March 31, 2021 | March 31, 2020 | | :--------------- | :------------- | :------------- | | Wholly-Owned Properties | 55 | 56 | | Unconsolidated Properties | 10 | 10 | | Gross Leasable Area (Wholly-Owned) | 8,394,757 SF | 8,488,479 SF | | Gross Leasable Area (Unconsolidated) | 2,470,193 SF | 2,470,134 SF | - The COVID-19 pandemic continues to disrupt the business, impacting tenants' ability to pay rent and potentially impairing investment property values. The Company collected $2.655 million of $2.899 million in deferred rental payments due in Q1 2021[29][30] 2. Basis of Presentation and Recently Issued Accounting Pronouncements This note outlines the accounting principles used in financial statement preparation and recent accounting standard adoptions - The financial statements are prepared in accordance with GAAP for interim information, requiring management estimates and assumptions in areas like asset impairment and fair value of debt[31] - The Company adopted ASU No. 2021-01 (Reference Rate Reform) in January 2021, which clarifies optional expedients for contract modifications and hedge accounting related to derivatives affected by discounting transition. This adoption did not result in incremental elections under Topic 848 regarding cash flow hedges[32] 3. Revenue Recognition This note details the components of the company's revenue, including lease income and other fee income | Income Type | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Minimum lease payments | $34,886 | $36,177 | | Real estate tax recoveries | $6,994 | $7,884 | | Common area maintenance, insurance, and other recoveries | $5,938 | $5,396 | | Lease income, net | $49,926 | $51,284 | - Net lease income decreased by $1.358 million year-over-year, primarily due to lower minimum lease payments and real estate tax recoveries[34] | Other Fee Income Type | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | | Property management fees | $587 | $577 | | Asset management fees | $271 | $285 | | Leasing commissions and other fees | $155 | $101 | | Total other fee income | $1,013 | $963 | 4. Acquired Properties This note provides information on properties acquired during the reporting periods - No retail properties were acquired during the three months ended March 31, 2021[36] | Acquisition Date | Property | Metropolitan Area | Gross Acquisition Price (in thousands) | Square Feet | | :--------------- | :------- | :---------------- | :------------------------------------- | :---------- | | Feb 25, 2020 | Trowbridge Crossing | Atlanta, GA | $10,950 | 62,600 | | Mar 10, 2020 | Antoine Town Center | Houston, TX | $22,254 | 110,500 | | Total | | | $33,204 | 173,100 | 5. Disposed Properties This note details properties disposed of, including sales prices and recognized gains or losses | Disposition Date | Property | Metropolitan Area | Gross Disposition Price (in thousands) | Gain (Loss) on Sale (in thousands) | | :--------------- | :------- | :---------------- | :------------------------------------- | :--------------------------------- | | Feb 28, 2021 | Sonterra Village | San Antonio, TX | $616 | $436 | | Mar 14, 2021 | Eldridge Town Center | Houston, TX | $133 | $104 | | Mar 31, 2021 | Windward Commons | Alpharetta, GA | $150 | $(21) | | Total | | | $899 | $519 | - The Company completed partial condemnations at three retail properties in Q1 2021, recognizing a net gain of $0.519 million[39] 6. Investment in Unconsolidated Entities This note describes the company's equity investments in joint ventures and their financial impact - The Company holds a 55% interest in IAGM Retail Fund I, LLC (IAGM), an unconsolidated retail joint venture. The carrying value of this investment was $106.566 million as of March 31, 2021, down from $109.051 million at December 31, 2020[40] - IAGM prepaid mortgages payable of $23.150 million in Q1 2021, compared to $14.872 million in Q1 2020[42] | IAGM Financials | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :---------------- | :---------------------------- | :------------------------------- | | Total assets | $426,212 | $459,847 | | Mortgages debt, net | $219,389 | $242,388 | | Equity | $193,772 | $198,315 | | Net income (Q1) | $1,114 | $3,255 | 7. Debt This note provides a breakdown of the company's debt structure, including mortgages and unsecured term loans - Total debt, net, was $504.965 million as of March 31, 2021, comprising $106.437 million in mortgages payable and $398.528 million in unsecured term loans[47] | Debt Type | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------- | :---------------------------- | :------------------------------- | | Mortgages payable, net | $106,437 | $106,728 | | Unsecured term loans, net | $398,528 | $398,381 | | Revolving Credit Agreement (outstanding) | $0 | $50,000 | - The Company repaid $50.0 million on its Revolving Credit Agreement in Q1 2021, resulting in no outstanding borrowings as of March 31, 2021[52][53] - The Company was in compliance with all loan covenants as of March 31, 2021, and December 31, 2020[48] 8. Fair Value Measurements This note explains the valuation methodologies and fair values of financial instruments and assets | Financial Instrument | Fair Value as of March 31, 2021 (in thousands) | Fair Value as of December 31, 2020 (in thousands) | | :------------------- | :--------------------------------------------- | :---------------------------------------------- | | Derivative interest rate liabilities | $(9,508) | $(12,449) | - The Company's derivative valuations are classified as Level 2 in the fair value hierarchy, indicating inputs other than quoted prices that are observable for the asset or liability[60] - In Q1 2020, a $9.002 million provision for asset impairment was recorded for one retail property due to its fair value being lower than carrying value, based on an executed sales contract[63] 9. Earnings Per Share and Equity Transactions This note presents earnings per share calculations and details equity-related transactions and programs | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributed to common shareholders | $(100) (in thousands) | $(3,486) (in thousands) | | Weighted average common shares outstanding (basic & diluted) | 719,462,786 | 720,825,864 | | Net loss per common share (basic & diluted) | $0.00 | $0.00 | - The Share Repurchase Program (SRP) was reinstated effective May 14, 2021, with a repurchase price of $2.17 per share, representing a 25% discount to the estimated NAV of $2.89 per share as of December 21, 2020. The Distribution Reinvestment Plan (DRP) remains suspended[70] 10. Stock-Based Compensation This note outlines the company's stock-based compensation plans and related expenses - The Company recognized stock-based compensation expense of $2.496 million for Q1 2021, a significant increase from $0.528 million in Q1 2020[74] - This increase was primarily driven by the expected retirement of the President and CEO in August 2021, leading to accelerated compensation expenses, and new RSU grants to executives as part of a succession plan[73][123] | RSU Activity (Q1 2021) | Unvested Time-Based RSUs | Unvested Performance-Based RSUs | Weighted-Average Grant Date Price Per Share | | :--------------------- | :----------------------- | :------------------------------ | :------------------------------------------ | | Outstanding as of Jan 1, 2021 | 1,103,816 | 3,320,954 | $3.14 | | Shares granted | 1,674,172 | 1,894,256 | $2.89 | | Shares forfeited | — | (431,246) | $3.14 | | Outstanding as of Mar 31, 2021 | 2,777,988 | 4,783,964 | $3.01 | 11. Commitments and Contingencies This note discloses the company's contractual obligations and potential legal liabilities - The Company is subject to various legal claims in the ordinary course of business, but management does not expect the final outcome to have a material adverse effect on financial condition, results of operations, or cash flows[76] | Lease Type | Remaining 2021 (in thousands) | 2022 (in thousands) | 2023 (in thousands) | 2024 (in thousands) | 2025 (in thousands) | Thereafter (in thousands) | Total Expected Minimum Lease Obligation (in thousands) | | :----------------------- | :---------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------------ | :----------------------------------------------------- | | Operating Leases | $383 | $522 | $536 | $550 | $53 | $0 | $2,044 | | Finance Leases | $291 | $279 | $21 | $0 | $0 | $0 | $591 | 12. Subsequent Events This note reports on significant events and transactions occurring after the balance sheet date - The Company has evaluated events and transactions occurring after March 31, 2021, through the financial statement issuance date for recognition and disclosure[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition, results of operations, and cash flows for the three months ended March 31, 2021, compared to the same period in 2020, highlighting the impact of the COVID-19 pandemic and strategic initiatives Overview This section introduces InvenTrust Properties Corp.'s business model and key performance indicators - InvenTrust Properties Corp. is a multi-tenant retail REIT focused on acquiring, owning, leasing, redeveloping, and managing grocery-anchored neighborhood centers and select power centers in Sun Belt markets[86] - Management evaluates financial condition and operating performance using indicators such as Net Operating Income (NOI), Funds From Operations (FFO), Adjusted FFO (AFFO), cash flow from operations, and economic/physical occupancy[87][88] Impact of the COVID-19 Pandemic on Our Business and Financial Statements This section details the ongoing effects of the pandemic on the company's operations, rent collections, and financial position - The COVID-19 pandemic continues to disrupt the business, affecting tenants' ability to pay rent and potentially impairing investment property values. The Company is assessing the ongoing impact and implementing mitigation measures[89] | Quarter End | Gross Rent Billed (in thousands) | Collected (in thousands) | Payment Deferral Plan (in thousands) | Estimated Credit Loss (in thousands) | Remaining Accounts Receivable (in thousands) | | :-------------------- | :------------------------------- | :----------------------- | :----------------------------------- | :----------------------------------- | :------------------------------------------- | | Mar. 31, 2021 | $52,217 | $50,863 | $(1,161) | $1,587 | $928 | | Dec. 31, 2020 | $53,562 | $52,901 | $(1,053) | $1,393 | $321 | | Sept. 30, 2020 | $52,522 | $49,596 | $828 | $1,891 | $207 | | June 30, 2020 | $52,387 | $45,149 | $3,100 | $4,062 | $76 | - As of March 31, 2021, the Company collected $3.1 million of $3.4 million in deferred rental payments due in Q1 2021. Cumulatively, $6.6 million in rental payment deferrals have been granted since the pandemic's start[92] Current Strategy and Outlook This section outlines the company's strategic focus on Sun Belt retail markets and its long-term objectives - The Company's strategy focuses on grocery-anchored neighborhood and select power centers in Sun Belt markets with favorable demographics, aiming for future rent increases and sustained occupancy[93] - The COVID-19 pandemic has delayed the process for exploring and executing a potential strategic transaction to achieve stockholder liquidity, influenced by macroeconomic factors and retail industry trends[96] Our Retail Portfolio This section provides a summary of the company's retail property portfolio, including occupancy and average base rent | Metric | Wholly-Owned Retail Properties (2021) | IAGM Retail Properties (at share) (2021) | Pro Rata Combined Retail Portfolio (2021) | | :---------------- | :------------------------------------ | :--------------------------------------- | :---------------------------------------- | | No. of properties | 55 | 10 | 65 | | GLA (square feet) | 8,394,757 | 1,358,606 | 9,753,363 | | Economic occupancy | 95.0% | 86.5% | 93.8% | | ABR PSF | $18.63 | $17.10 | $18.44 | - The Pro Rata Combined Retail Portfolio's economic occupancy decreased from 95.4% in Q1 2020 to 93.8% in Q1 2021, and ABR PSF slightly declined from $18.56 to $18.44[99] Retail Portfolio Summary by Center Type This section categorizes the retail portfolio by center type, detailing properties, GLA, occupancy, and ABR | Center Type | Metric | Pro Rata Combined Retail Portfolio (2021) | Pro Rata Combined Retail Portfolio (2020) | | :-------------------- | :------- | :---------------------------------------- | :---------------------------------------- | | Community and neighborhood centers | No. of properties | 49 | 49 | | | GLA (SF) | 5,813,803 | 5,748,634 | | | Economic occupancy | 94.1% | 95.5% | | | ABR PSF | $19.30 | $19.58 | | Power centers | No. of properties | 16 | 17 | | | GLA (SF) | 3,939,560 | 4,098,418 | | | Economic occupancy | 93.3% | 95.2% | | | ABR PSF | $17.11 | $17.06 | Same-Property Retail Portfolio Summary This section presents key metrics for the company's same-property retail portfolio, focusing on comparable performance | Metric | Wholly-Owned Retail Properties (2021) | IAGM Retail Properties (at share) (2021) | Pro Rata Combined Retail Portfolio (2021) | | :---------------- | :------------------------------------ | :--------------------------------------- | :---------------------------------------- | | No. of properties | 53 | 10 | 63 | | GLA (square feet) | 8,156,109 | 1,358,606 | 9,514,715 | | Economic occupancy | 94.9% | 86.5% | 93.7% | | ABR PSF | $18.85 | $17.10 | $18.62 | - Same-property economic occupancy for the Pro Rata Combined Retail Portfolio decreased from 95.7% in Q1 2020 to 93.7% in Q1 2021[105] Market Summary This section provides a geographical breakdown of the company's retail properties across different states and regions | State | Region | No. of Properties | Pro Rata Combined Retail Portfolio GLA (SF) | | :------ | :------------- | :---------------- | :------------------------------------------ | | Texas | Southwest | 25 | 3,820,858 | | Florida | South Atlantic | 10 | 1,981,512 | | Georgia | South Atlantic | 10 | 1,057,602 | | California | West | 7 | 1,050,623 | | North Carolina | South Atlantic | 7 | 1,015,870 | | Colorado | West | 3 | 466,639 | | Maryland | East | 2 | 183,348 | | Virginia | South Atlantic | 1 | 176,911 | | Total | | 65 | 9,753,363 | - Texas represents the largest market for the Company's retail portfolio, accounting for 25 properties and over 3.8 million square feet of GLA[107] Lease Expirations This section details the schedule of expiring leases, including GLA and associated annual base rent | Lease Expiration Year | No. of Expiring Leases | GLA of Expiring Leases (SF) | Percent of Total GLA of Expiring Leases | ABR of Expiring Leases (in thousands) | Percent of Total ABR | Expiring ABR PSF | | :-------------------- | :--------------------- | :-------------------------- | :-------------------------------------- | :------------------------------------ | :------------------- | :--------------- | | 2021 | 98 | 211,404 | 2.3% | $5,712 | 3.4% | $27.02 | | 2022 | 218 | 1,347,036 | 14.7% | $22,877 | 13.7% | $16.98 | | 2023 | 207 | 954,827 | 10.4% | $17,520 | 10.6% | $18.35 | | 2024 | 191 | 1,061,434 | 11.6% | $20,269 | 12.1% | $19.10 | | 2025 | 182 | 1,104,179 | 12.1% | $18,817 | 11.3% | $17.04 | | Thereafter | 86 | 1,376,920 | 15.1% | $20,482 | 12.2% | $14.88 | - The Company's lease expirations are diversified, with no single year representing a disproportionately high percentage of total GLA or ABR, minimizing rollover risk[109][111] Leasing Activity, Pro Rata Combined Retail Portfolio This section summarizes leasing performance, including retention rates, new lease terms, and rent changes - During Q1 2021, the Company re-leased 464,809 square feet out of 516,365 square feet expiring, achieving a retention rate of approximately 90.0% for its Pro Rata Combined Retail Portfolio[114] | Lease Type (Q1 2021) | No. of Leases | GLA SF | New Contractual Rent ($PSF) | Prior Contractual Rent ($PSF) | % Change over Prior Contract | Weighted Average Lease Term (Years) | Tenant Improvement Allowance ($PSF) | Commissions ($PSF) | | :------------------- | :------------ | :----- | :-------------------------- | :---------------------------- | :--------------------------- | :---------------------------------- | :---------------------------------- | :----------------- | | All Tenants (Total) | 70 | 338,816 | $20.15 | $20.37 | (1.1)% | 8.1 | $4.70 | $1.75 | | Anchor Tenants (Total) | 6 | 190,235 | $13.77 | $13.31 | 3.5% | 10.2 | $2.84 | $0.69 | | Small Shop Tenants (Total) | 64 | 148,581 | $26.81 | $27.75 | (3.4)% | 5.5 | $7.07 | $3.10 | - Comparable renewal leases for all tenants saw a (1.2)% decrease in contractual rent, while comparable new leases saw a 0.2% increase[115] Results of Operations This section analyzes the company's revenues, operating expenses, and other income/expenses for the reporting periods | Income Item | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Total Increase (Decrease), net (in thousands) | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Lease income, net | $49,926 | $51,284 | $(1,358) | | Other property income | $182 | $191 | $(9) | | Other fee income | $1,013 | $963 | $50 | | Total income | $51,121 | $52,438 | $(1,317) | - Lease income, net, decreased by $1.7 million on a same-property basis, primarily due to decreased minimum rent, increased rent abatements, and decreased recovery revenue, largely attributed to the COVID-19 pandemic[119] | Operating Expense Item | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Total Increase (Decrease), net (in thousands) | | :--------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Depreciation and amortization | $21,687 | $22,122 | $(435) | | Property operating | $8,009 | $7,108 | $901 | | Real estate taxes | $8,133 | $8,489 | $(356) | | General and administrative | $10,351 | $7,195 | $3,156 | | Total operating expenses | $48,180 | $44,914 | $3,266 | - General and administrative expenses increased by $3.2 million, mainly due to higher long-term incentive plan costs and other compensation costs, driven by executive retirement and succession planning[123] | Other (Expense) Income Item | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Change, net (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------- | | Interest expense, net | $(3,985) | $(4,809) | $824 | | Provision for asset impairment | $0 | $(9,002) | $9,002 | | Gain on sale of investment properties, net | $519 | $457 | $62 | | Equity in earnings of unconsolidated entities | $620 | $789 | $(169) | | Other income and expense, net | $(195) | $1,555 | $(1,750) | | Total other (expense) income, net | $(3,041) | $(11,010) | $7,969 | - The significant improvement in total other (expense) income, net, was primarily due to the absence of a $9.0 million asset impairment provision in Q1 2021 and lower interest expense[125][126][127] Net Operating Income (NOI) This section defines and presents the company's Net Operating Income, a key measure of property-level performance - NOI is a non-GAAP measure used to evaluate the performance of wholly-owned and consolidated retail properties, excluding general and administrative expenses, depreciation, and other non-operating items[131] | Metric | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net loss | $(100) | $(3,486) | | NOI | $32,086 | $33,872 | | Same-property NOI | $31,441 | $33,572 | - Same-property NOI decreased by $2.1 million, or (6.3)%, year-over-year, primarily due to a $1.0 million decrease in minimum rent, $0.5 million increase in rent abatements, $0.5 million decrease in recovery revenue, and $0.6 million increase in non-recoverable expenses, partially offset by a $0.5 million decrease in estimated credit losses. These fluctuations are attributed to the COVID-19 pandemic[136] Funds From Operations (FFO) and Adjusted FFO (AFFO) This section provides FFO and AFFO, non-GAAP measures crucial for evaluating REIT operating performance - FFO and AFFO are supplemental non-GAAP financial measures used to assess operating performance, with AFFO providing an additional measure by accounting for certain amortization assumptions and unique revenue/expense items[137][138] | Metric | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | FFO Applicable to Common Shares and Dilutive Securities | $22,898 | $28,993 | | AFFO Applicable to Common Shares and Dilutive Securities | $22,125 | $28,431 | | FFO Applicable to Common Shares and Dilutive Securities per share | $0.03 | $0.04 | | AFFO Applicable to Common Shares and Dilutive Securities per share | $0.03 | $0.04 | - Both FFO and AFFO decreased year-over-year, reflecting the impact of lower net income and other adjustments[139] Liquidity and Capital Resources This section discusses the company's ability to meet short-term and long-term financial obligations and funding strategies | Capital Resource Use (Q1 2021) | Direct Costs (in thousands) | Indirect Costs (in thousands) | Total (in thousands) | | :----------------------------- | :-------------------------- | :---------------------------- | :------------------- | | Development and Re-development | $398 | $146 | $544 | | Capital Expenditures | $1,213 | $360 | $1,573 | | Leasing | $1,380 | $0 | $1,380 | | Total | $2,991 | $506 | $3,497 | - The Company's short-term liquidity is used for operating expenses, debt service, capital expenditures, and stockholder distributions. The COVID-19 pandemic's impact on future liquidity is uncertain but not expected to affect short-term requirements[143][144] - Long-term objectives include maximizing revenue, enhancing property value, and generating predictable cash flow for distributions. The Board approved an increase to the annual distribution rate effective April 2021[145][146] Summary of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three months ended March 31, 2021 (in thousands) | Three months ended March 31, 2020 (in thousands) | Change (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Cash provided by operating activities | $20,846 | $16,898 | $3,948 | | Cash used in investing activities | $(4,490) | $(38,499) | $34,009 |\ | Cash (used in) provided by financing activities | $(64,087) | $95,215 | $(159,302) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(47,731) | $73,614 | $(121,345) | - Operating cash flow increased by $3.9 million due to working capital fluctuations and property acquisitions/dispositions[153] - Investing cash outflow significantly decreased by $34.0 million, primarily because there were no investment property acquisitions in Q1 2021, compared to $32.4 million in Q1 2020[154][155] - Financing activities shifted to a net cash outflow of $64.1 million in Q1 2021, driven by $50.0 million in debt payoffs and $13.6 million in distributions, contrasting with Q1 2020's $95.2 million inflow from debt proceeds[156] Off Balance Sheet Arrangements This section discloses the company's off-balance sheet arrangements, primarily its joint venture investments - The Company's only off-balance sheet arrangement is its joint venture, IAGM, as detailed in Note 6[157] Contractual Obligations This section details the company's future payment obligations under various contracts, including debt and leases | Obligation Type | 2021 (in thousands) | 2022 (in thousands) | 2023 (in thousands) | 2024 (in thousands) | 2025 (in thousands) | Thereafter (in thousands) | Total (in thousands) | | :-------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | :------------------------ | :------------------- | | Fixed rate debt, principal | $0 | $22,723 | $239,879 | $115,700 | $28,630 | $0 | $406,932 | | Variable-rate debt, principal | $0 | $0 | $50,000 | $50,000 | $0 | $0 | $100,000 | | Interest | $10,466 | $13,358 | $11,769 | $3,253 | $744 | $0 | $39,590 | | Operating lease obligations | $383 | $522 | $536 | $550 | $53 | $0 | $2,044 | | Finance lease obligations | $291 | $279 | $21 | $0 | $0 | $0 | $591 | | Grand total | $11,140 | $36,882 | $302,205 | $169,503 | $29,427 | $0 | $549,157 | - The largest portion of long-term debt maturities, including fixed and variable-rate debt, is concentrated in 2023 ($289.9 million principal) and 2024 ($165.7 million principal)[159] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the Company's exposure to market risks, primarily focusing on interest rate risk associated with its variable-rate debt and the pricing of new fixed-rate debt Interest Rate Risk This section analyzes the company's exposure to fluctuations in interest rates and its hedging strategies - The Company is exposed to interest rate risk from variable-rate debt and the cost of new fixed-rate debt. As of March 31, 2021, $100.0 million of its $400.0 million variable-rate term loans remained unhedged[161][162] - A 1% increase or decrease in market interest rates on variable-rate debt would result in an approximate $1.0 million annual change in interest expense[162] - The transition from USD-LIBOR to SOFR is not expected to have a material impact due to existing provisions in credit and swap agreements[163] | Interest Rate Swap | Notional Amount (in thousands) | Fair Value as of March 31, 2021 (in thousands) | Fair Value as of December 31, 2020 (in thousands) | | :----------------- | :----------------------------- | :--------------------------------------------- | :---------------------------------------------- | | Total fixed of unsecured term loan | $300,000 | $(9,414) | $(12,160) | | Total fixed of secured term loan (IAGM) | $75,000 | $(171) | $(525) | Item 4. Controls and Procedures This section addresses the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Disclosure Controls and Procedures This section confirms the effectiveness of the company's controls for ensuring timely and accurate financial disclosures - As of March 31, 2021, the Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective[165] Changes in Internal Control Over Financial Reporting This section reports on any material changes to the company's internal control over financial reporting during the period - There were no material changes to the Company's internal control over financial reporting during the quarter ended March 31, 2021[166] Part II - Other Information This section provides additional disclosures not covered in the financial statements or management's discussion and analysis Item 1. Legal Proceedings This section states that the Company is subject to various legal proceedings in the ordinary course of business, but management does not anticipate a material adverse effect on its financial condition or operations - The Company is involved in various legal proceedings and claims arising in the ordinary course of business, generally covered by insurance policies[167] - Management believes the final outcome of these matters will not have a material adverse effect on the Company's financial condition, results of operations, or liquidity[167] Item 1A. Risk Factors This section indicates that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K - No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020[168] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or use of proceeds during the reporting period - There were no unregistered sales of equity securities or use of proceeds to report[169] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[170] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[170] Item 5. Other Information This section indicates that there is no other information to report - There is no other information to report[171] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including various agreements, certifications, and XBRL financial information - The report includes various exhibits such as Master Modification Agreements, Asset Acquisition Agreements, Separation and Distribution Agreements, Stock Purchase Agreements, Articles of Amendment, Bylaws, and Certifications (302 and 906)[173] - Financial information from the Quarterly Report is formatted in Extensible Business Reporting Language (XBRL)[173] Signatures This section contains the required signatures of the Company's authorized officers, confirming the submission of the report - The report is signed by Thomas P. McGuinness, Chief Executive Officer, and Daniel J. Busch, President, Chief Financial Officer and Treasurer, on May 7, 2021[177]