Inland Real Estate Income Trust Inc.

11/06/2025 | Press release | Distributed by Public on 11/06/2025 12:41

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this Quarterly Report on Form 10-Q constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Words such as "may," "could," "should," "expect," "intend," "plan," "goal," "seek," "anticipate," "believe," "estimate," "predict," "variables," "potential," "continue," "expand," "maintain," "create," "strategies," "likely," "will," "would" and variations of these terms and similar expressions, or the negative of these terms or similar expressions, are intended to identify forward-looking statements.

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of the management of Inland Real Estate Income Trust, Inc. (which we refer to herein as the "Company," "we," "our" or "us") based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under "Risk Factors" in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission on March 5, 2025 and subsequent Quarterly Reports on Form 10-Q, some of which are summarized below:

•
Our board is reviewing strategic alternatives but has decided against selling the Company at this time. There is no assurance that the review of other alternatives will lead to a liquidity event for stockholders;
•
During the pendency of our board's review of strategic alternatives, we do not expect to acquire new properties or engage in redevelopment activities which may negatively impact our ability to grow our assets and income;
•
There are inherent risks with real estate investments. For example, an investment in real estate cannot generally be quickly sold, limiting our ability to promptly vary our portfolio in response to changing economic, financial and investment conditions. Investments in real estate assets also are subject to adverse changes in general economic conditions which, for example, reduce the demand for rental space;
•
As of November 6, 2025, we have three mortgage loans with an aggregate principal balance of approximately $121.3 million maturing in the next twelve months. We expect to repay these mortgage loans by drawing on our Credit Facility, which we are in the process of amending. The interest rate for draws on the amended credit facility will be greater than the weighted rate on the maturing loans and will reduce the amount available under the Credit Facility for other purposes;
•
Market disruptions and uncertainties resulting from any future global pandemic or epidemic, ongoing hostilities in various parts of the world, NATO and the international community's response thereto and other geopolitical events affecting the financing markets generally, inflation, tariffs, changes in governmental programs or spending, volatility in interest rates, supply chain shortages that affect our tenants or other disruptions caused by events beyond our control may adversely impact the economy generally and the retail sector in particular;
•
We have incurred net losses on a GAAP basis for the three and nine months ended September 30, 2025 and 2024, and for the year ended December 31, 2024;
•
Our Business Manager and its affiliates face conflicts of interest caused by, among other things, their compensation arrangements with us, and the simultaneous overlapping leadership roles certain of our executive officers have at the Business Manager and its affiliates, which could result in actions that are not in the long-term best interests of our stockholders;
•
Our Sponsor may face a conflict of interest in allocating personnel and resources between its affiliates, our Business Manager and our Real Estate Manager;
•
We do not have arm's-length agreements with our Business Manager, our Real Estate Manager or any other affiliates of our Sponsor;
•
We pay fees, which may be significant, to our Business Manager, Real Estate Manager and other affiliates of our Sponsor;
•
Our properties may compete with the properties owned by other programs sponsored by our Sponsor or Inland Private Capital Corporation for, among other things, tenants;
•
Our Business Manager is under no obligation, and may not agree, to forgo or defer its business management fee; and
•
If we fail to continue to qualify as a REIT, our operations and distributions to stockholders, if any, will be adversely affected.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management's view only as of the date of this Quarterly Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results except as required by

applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.

The following discussion and analysis relates to the three and nine months ended September 30, 2025 and 2024 and as of September 30, 2025 and December 31, 2024. Our stockholders should read the following discussion and analysis along with our consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q.

We routinely post important information about us and our business, including financial and other information for investors, on our website. We encourage investors to visit our website at inland-investments.com/inland-income-trust from time to time, as information is updated and new information is posted.

Overview

We were formed as a Maryland corporation on August 24, 2011 to acquire and manage a portfolio of commercial real estate investments located in the United States. We elected to be taxed as a real estate investment trust for U.S. federal income tax purposes ("REIT") under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the tax year ended December 31, 2013. We currently focus on acquiring and owning a portfolio substantially all of which is comprised of grocery-anchored properties. As previously noted, our board of directors (the "board") has been reviewing strategic alternatives including sale of the company. The board retained a financial advisor and through the financial advisor engaged in discussions with potential purchasers. Based on this engagement and subsequent follow-up review and discussion, the board has decided not to pursue the sale of the company at this time. The board has asked IREIT Business Manager & Advisor, Inc., referred to herein as our "Business Manager," to evaluate the Company's business plan and related strategy and to consider and present alternatives and enhancements to this plan and strategy for board review. The goal is to increase assets and cash flow on an accretive basis as well as enhance our capital (primarily equity) and provide liquidity to stockholders over time. See Item 1A. "Risk Factors" for additional information. The board may also engage other third parties to provide further strategic insight and review. To address upcoming debt maturities, the company expects to enter into an amended credit facility agreement that will both extend the term of the agreement and increase the amount that may be drawn under the facility. We expect to repay maturing indebtedness secured by certain of our properties by drawing on the credit facility. See "Liquidity and Capital Resources-General." Further, solely to assist broker-dealers in satisfying their obligations to report values on customer account statements, the Company anticipates publishing an estimate of per share net asset value as of September 30, 2025 no later than December 31, 2025.

We raised equity capital through a "best efforts" offering that commenced on October 18, 2012, and concluded on October 16, 2015. We sold 33,534,022 shares of common stock in the offering generating gross proceeds of $834.4 million. We have also generated equity capital through the sale of shares through our DRP. As of September 30, 2025, we had issued a total of 6,760,659 shares through the DRP generating aggregate proceeds of $148.1 million. The DRP has, however, been suspended pending the board's review of strategic alternatives.

As of September 30, 2025, we owned 52 retail properties, totaling 7.2 million square feet located in 24 states. A majority of our properties are multi-tenant, necessity-based retail shopping centers located primarily in major regional markets and growing secondary markets throughout the United States. As of September 30, 2025, grocery-anchored or grocery shadow-anchored shopping center properties represented 87% of our annualized base rent. A grocery shadow-anchored shopping center is a shopping center near a grocery store that we do not own and is not a part of our shopping center but that we believe generates traffic for our shopping center. As of September 30, 2025, our portfolio had physical and economic occupancy of 91.3% and 91.6%, respectively. Physical and economic occupancy both decreased approximately 0.3% compared to June 30, 2025, and has declined from physical and economic occupancy of 93.1% and 93.4%, respectively, as of December 31, 2024. As of September 30, 2025, annualized base rent ("ABR") per square foot averaged $20.11 for all owned properties. ABR is calculated by annualizing the monthly base rent for leases in-place as of the applicable date, excluding ground leases. ABR including ground leases averaged $17.18 as of September 30, 2025. There were no acquisitions or dispositions during the three and nine months ended September 30, 2025.

We have no employees and are externally managed and advised by the Business Manager, to whom we pay fees and reimburse certain expenses for the services provided to us. Our president and chief executive officer, Mark Zalatoris, serves in these capacities pursuant to an agreement we entered into with Mr. Zalatoris which, as amended, is referred to herein as the "CEO Agreement." Under this agreement, we compensate Mr. Zalatoris directly for his services. Our relationship with the Business Manager is governed by the Amended and Restated Fourth Business Management Agreement (the "Fourth Business Management Agreement") that we have entered into with the Business Manager. Under the Fourth Business Management Agreement, we pay the Business Manager a fee for the services it provides to the Company and reimburse the Business Manager for certain expenses that it incurs on the Company's behalf. The fee that we pay to the Business Manager is reduced dollar for dollar for amounts we pay to Mr. Zalatoris under the CEO Agreement. Mr. Zalatoris is not an employee of the Company and is not an officer or director of the Business Manager but has the authority under the CEO Agreement and the Fourth Business Management Agreement to direct the day-to-day operations of the Business Manager. Our properties are managed by Inland Commercial Real Estate Services LLC, an indirect wholly owned subsidiary of our Sponsor.

Inflation and Interest Rates

Inflationary pressures and volatility in interest rates, as well as the imposition of new duties, tariffs, trade barriers and retaliatory countermeasures by the U.S. and other governments, could reduce consumer spending and adversely impact retailer profitability, particularly if rates rise which may impact our ability to increase rents as well as tenant demand for new and existing store locations. Regardless of inflation levels, base rent under most of our long-term anchor leases remain constant (subject to tenants' exercise of renewal options at pre-negotiated rent increases) until the expiration of their lease terms, regardless of the inflation rate for any particular period. While many of our leases require tenants to pay their share of shopping center operating expenses (including common area maintenance, real estate tax and insurance expenses), our ability to collect the expense increases passed through to tenants is dependent on their ability to absorb and pay these increases. Inflation may also impact other aspects of our operating costs, including fees paid to service providers, the cost to complete redevelopments and build-outs of recently leased vacancies and interest rate costs relating to variable rate loans and refinancing of lower fixed-rate indebtedness. While we have not been significantly impacted by any of these items to date, no assurances can be provided that these inflationary pressures will not have a material adverse effect on our business in the future.

SELECT PROPERTY INFORMATION(All dollar amounts in thousands, except per square foot amounts)

Investment Properties

As of September 30, 2025

Number of properties

52

Purchase price

$

1,624,667

Total square footage

7,169,567

Physical occupancy

91.3

%

Economic occupancy

91.6

%

Weighted average remaining lease term (years) (a)

4.5

(a)
Weighted average remaining lease term is based on a weighting by ABR as of September 30, 2025.

The table below presents information for each of our investment properties as of September 30, 2025.

Property

Location

Square
Footage

Physical
Occupancy

Economic
Occupancy

Mortgage
Balance

Interest
Rate (b)

Newington Fair (a)

Newington, CT

186,205

72.3

%

72.3

%

$

-

-

Wedgewood Commons (a)

Olive Branch, MS

169,558

88.6

%

88.6

%

-

-

Park Avenue (a)

Little Rock, AR

78,702

96.5

%

96.5

%

-

-

North Hills Square (a)

Coral Springs, FL

63,829

100.0

%

100.0

%

-

-

Mansfield Shopping Center (a)

Mansfield, TX

148,529

86.6

%

86.6

%

-

-

Lakeside Crossing (a)

Lynchburg, VA

67,034

97.8

%

97.8

%

-

-

MidTowne Shopping Center (a)

Little Rock, AR

126,288

74.6

%

74.6

%

-

-

Dogwood Festival (a)

Flowood, MS

188,770

90.7

%

91.4

%

-

-

Pick N Save Center (a)

West Bend, WI

94,446

97.4

%

97.4

%

-

-

Harris Plaza (a)

Layton, UT

125,814

71.1

%

71.1

%

-

-

Dixie Valley (a)

Louisville, KY

119,911

81.2

%

81.2

%

-

-

The Landings at Ocean Isle (a)

Ocean Isle, NC

53,203

97.4

%

97.4

%

-

-

Shoppes at Prairie Ridge (a)

Pleasant Prairie, WI

232,606

97.2

%

99.2

%

-

-

Harvest Square (a)

Harvest, AL

70,590

98.0

%

98.0

%

-

-

Heritage Square (a)

Conyers, GA

22,510

93.8

%

93.8

%

-

-

The Shoppes at Branson Hills (a)

Branson, MO

256,244

94.7

%

94.7

%

-

-

Branson Hills Plaza (a)

Branson, MO

210,201

100.0

%

100.0

%

-

-

Copps Grocery Store (a)

Stevens Point, WI

69,911

100.0

%

100.0

%

-

-

Fox Point Plaza (a)

Neenah, WI

171,121

99.1

%

99.1

%

-

-

Shoppes at Lake Park (a)

W. Valley City, UT

52,997

82.5

%

82.5

%

-

-

Plaza at Prairie Ridge (a)

Pleasant Prairie, WI

9,035

100.0

%

100.0

%

-

-

Green Tree Shopping Center (a)

Katy, TX

147,621

85.2

%

85.2

%

-

-

Eastside Junction (a)

Athens, AL

79,675

96.7

%

96.7

%

-

-

Fairgrounds Crossing (a)

Hot Springs, AR

155,127

100.0

%

100.0

%

-

-

Prattville Town Center (a)

Prattville, AL

168,842

100.0

%

100.0

%

-

-

Regal Court

Shreveport, LA

363,061

92.5

%

92.5

%

26,000

4.55

%

Shops at Hawk Ridge (a)

St. Louis, MO

75,951

100.0

%

100.0

%

-

-

Walgreens Plaza (a)

Jacksonville, NC

42,219

52.8

%

52.8

%

-

-

Frisco Marketplace (a)

Frisco, TX

112,024

90.6

%

90.6

%

-

-

White City (a)

Shrewsbury, MA

256,974

81.5

%

81.5

%

-

-

Yorkville Marketplace (a)

Yorkville, IL

111,591

94.7

%

94.7

%

-

-

Shoppes at Market Pointe (a)

Papillion, NE

253,793

97.9

%

97.9

%

-

-

Marketplace at El Paseo (a)

Fresno, CA

224,683

96.4

%

96.4

%

-

-

The Village at Burlington Creek

Kansas City, MO

157,937

78.2

%

78.2

%

16,154

4.25

%

Milford Marketplace

Milford, CT

111,911

97.3

%

97.3

%

18,727

4.02

%

Settlers Ridge

Pittsburgh, PA

473,871

90.5

%

90.5

%

76,532

3.70

%

Blossom Valley Plaza (a)

Turlock, CA

111,475

98.7

%

98.7

%

-

-

Oquirrh Mountain Marketplace (a)

South Jordan, UT

75,950

97.1

%

97.1

%

-

-

Marketplace at Tech Center (a)

Newport News, VA

210,648

89.3

%

93.1

%

-

-

Coastal North Town Center (a)

Myrtle Beach, SC

304,662

97.5

%

97.5

%

-

-

Oquirrh Mountain Marketplace II (a)

South Jordan, UT

10,150

84.7

%

84.7

%

-

-

Wilson Marketplace (a)

Wilson, NC

311,030

98.4

%

98.4

%

-

-

Pentucket Shopping Center (a)

Plaistow, NH

199,454

97.4

%

97.4

%

-

-

Hickory Tavern

Myrtle Beach, SC

6,588

100.0

%

100.0

%

-

-

New Town (a)

Owings Mill, MD

117,593

45.1

%

45.1

%

-

-

Olde Ivy Village (a)

Smyrna, GA

46,500

88.5

%

96.7

%

-

-

Northpark Village Square (a)

Santa Clarita, CA

87,103

97.9

%

97.9

%

-

-

Lower Makefield Shopping Center (a)

Lower Makefield, PA

74,953

82.9

%

82.9

%

-

-

Denton Village (a)

Denton, TX

48,280

96.9

%

96.9

%

-

-

Rusty Leaf Plaza (a)

Orange, CA

59,188

95.3

%

95.3

%

-

-

Northville Park Place (a)

Northville, MI

78,421

82.8

%

82.8

%

-

-

CityPlace (a)

Woodbury, MN

174,788

98.4

%

98.4

%

-

-

Portfolio total

7,169,567

91.3

%

91.6

%

$

137,413

3.97

%

(a)
Property is included in the pool of properties comprising the borrowing base under our Credit Facility as of September 30, 2025.
(b)
Portfolio total is equal to the weighted average interest rate.

Tenancy Highlights

The following table presents information regarding the top ten tenants in our portfolio based on annualized base rent for leases in-place as of September 30, 2025.

Tenant Name

Number
of
Leases

Annualized
Base Rent

Percent of
Total
Portfolio
Annualized
Base Rent

Annualized
Base Rent
Per Square
Foot

Square
Footage

Percent of
Total
Portfolio
Square
Footage

The Kroger Co

5

$

4,899

4.3

%

$

16.54

296,150

4.1

%

The TJX Companies, Inc.

14

3,834

3.4

%

10.83

354,070

4.9

%

Ross Dress for Less, Inc.

10

2,828

2.5

%

10.79

262,080

3.7

%

Ulta Salon, Cosmetics & Fragrance Inc.

11

2,449

2.2

%

22.07

110,958

1.6

%

Amazon/Whole Foods Market Group, Inc.

3

2,377

2.0

%

20.59

115,410

1.6

%

Planet Fitness

6

2,161

1.9

%

17.50

123,486

1.7

%

Dick's Sporting Goods, Inc.

4

2,158

1.9

%

11.94

180,766

2.5

%

PetSmart

7

2,117

1.9

%

15.27

138,578

1.9

%

Sprouts Farmers Market, LLC

4

2,092

1.9

%

18.50

113,092

1.6

%

Albertsons/Jewel/Shaw's

2

2,090

1.9

%

16.34

127,892

1.8

%

Top Ten Tenants

66

$

27,005

23.9

%

$

14.82

1,822,482

25.4

%

The following table sets forth a summary of our tenant diversity for our entire portfolio and is based on leases in-place as of September 30, 2025.

Tenant Type

Gross Leasable
Area -
Square Footage

Percent of
Total Gross
Leasable Area

Percent of
Total Annualized
Base Rent

Discount and Department Stores

1,433,846

21.8

%

11.0

%

Grocery

1,331,575

20.3

%

16.9

%

Lifestyle, Health Clubs, Books & Phones

849,885

12.9

%

15.5

%

Home Goods

819,541

12.5

%

6.9

%

Restaurant

635,607

9.7

%

18.7

%

Apparel & Accessories

452,051

6.9

%

9.2

%

Consumer Services, Salons, Cleaners, Banks

346,989

5.3

%

9.6

%

Pet Supplies

258,136

3.9

%

4.0

%

Sporting Goods

201,977

3.1

%

2.3

%

Health, Doctors & Health Foods

182,898

2.8

%

5.0

%

Other

51,485

0.8

%

0.9

%

Total

6,563,990

100.0

%

100.0

%

The following table sets forth a summary, as of September 30, 2025, of the percent of total annualized base rent and the weighted average lease expiration by size of tenant.

Size of Tenant

Description -
Square Footage

Percent of Total Annualized Base Rent

Weighted Average Lease Expiration - Years

Anchor

10,000 and over

48

%

5.4

Junior Box

5,000-9,999

14

%

4.0

Small Shop

Less than 5,000

38

%

3.5

Total

100

%

4.5

Party City, which leased space at four of our properties, filed for bankruptcy protection in December 2024. All four stores were closed as of March 31, 2025. Party City rejected their leases at all four of our locations and we currently have possession of these spaces. We have executed leases with backfills for two of these spaces. We are marketing the remaining two spaces.

With respect to our location affected by the American Freight bankruptcy, the location closed and that lease was rejected in December 2024. We are marketing the space.

Rite Aid, which leased space at one of our properties, filed for bankruptcy in May 2025. Rite Aid closed this location, and the lease was rejected at the end of August. We are marketing the space.

Lease Expirations

The following table sets forth a summary, as of September 30, 2025, of lease expirations scheduled to occur during the remainder of 2025 and each of the calendar years from 2026 to 2034 and thereafter, assuming no exercise of renewal options or early termination rights for leases commenced on or prior to September 30, 2025. Annualized base rent represents the rent in-place for the applicable property as of September 30, 2025. The table below includes ground leases. If ground leases are excluded, annualized base rent would equal $102,820 or $20.11 per square foot for total expiring leases.

Lease Expiration Year

Number of
Expiring
Leases

Gross Leasable Area of Expiring Leases - Square Footage

Percent of
Total Gross
Leasable
Area of
Expiring
Leases

Total
Annualized
Base Rent
of Expiring
Leases

Percent of
Total
Annualized
Base Rent
of Expiring
Leases

Annualized Base Rent per Leased Square Foot

2025 (including month-to-month)

46

127,116

1.9

%

$

3,910

3.5

%

$

30.76

2026

91

342,448

5.2

%

7,610

6.7

%

22.22

2027

121

826,490

12.6

%

14,541

12.9

%

17.59

2028

151

1,436,302

21.9

%

19,269

17.1

%

13.42

2029

130

887,690

13.5

%

16,826

14.9

%

18.96

2030

119

851,917

13.0

%

17,883

15.9

%

20.99

2031

39

346,700

5.3

%

6,659

5.9

%

19.21

2032

32

206,573

3.1

%

5,019

4.5

%

24.29

2033

27

197,841

3.0

%

3,676

3.3

%

18.58

2034

26

592,405

9.0

%

7,369

6.5

%

12.44

Thereafter

31

748,508

11.5

%

10,004

8.8

%

13.37

Leased Total

813

6,563,990

100.0

%

$

112,766

100.0

%

$

17.18

Refer to "Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Leasing Activity" for details regarding the leasing activity during the nine months ended September 30, 2025.

Liquidity and Capital Resources

General

Our primary uses and sources of cash are as follows:

Uses

Sources

•

Interest and principal payments on mortgage loans and
Credit Facility

•

Cash receipts from our tenants

•

Property operating expenses

•

Sale of shares through the DRP (if reinstated)

•

General and administrative expenses

•

Proceeds from new or refinanced mortgage loans

•

Distributions to stockholders

•

Borrowing on our Credit Facility

•

Fees payable to our Business Manager and Real Estate
Manager

•

Proceeds from sales of real estate (if any)

•

Repurchases of shares under the SRP (if reinstated)

•

Proceeds from issuance of securities (if any) other than through the DRP

•

Capital expenditures, tenant improvements and leasing commissions

•

Acquisitions of real estate directly or through joint ventures

•

Redevelopments of entire properties or certain spaces within our properties

During the periods covered by this Quarterly Report on Form 10-Q, we have funded our capital needs almost exclusively through cash flow from operations (to the extent positive), from the proceeds of shares issued through our DRP, and through draws on the Credit Facility, if needed.

As of September 30, 2025, we had total debt outstanding of $830 million, excluding unamortized debt issuance costs, which bore interest at a weighted average interest rate of 4.50% per annum. As of September 30, 2025, the weighted average years to maturity for our debt was one year, not taking into account any extension options that may be exercised at our option. As of September 30, 2025 and December 31, 2024, our borrowings were 51% and 52%, respectively, of the purchase price of our investment properties. As of September 30, 2025, our cash and cash equivalents balance was $11.5 million. See Item 1A. - "Risk Factors - The financial covenants under our credit agreement may restrict our ability to make distributions and our operating and acquisition activities. If we breach the financial covenants we could be held in default under the credit agreement, which could accelerate our repayment date and materially adversely affect our liquidity and financial condition."for further information.

As of September 30, 2025, we had $118 million outstanding under the Revolving Credit Facility and $575 million outstanding under the Term Loan. As of September 30, 2025, the interest rates on the Revolving Credit Facility and the Term Loan were 6.16% and 4.29%, respectively. As of September 30, 2024, the interest rates on the Revolving Credit Facility and the Term Loan were 6.86% and 4.35%, respectively. The Revolving Credit Facility matures on February 3, 2026 subject to a twelve month extension, at the Company's option. The Term Loan matures on February 3, 2027. As of November 6, 2025 and September 30, 2025, we had $65 million and $82 million, respectively, available for borrowing under the Revolving Credit Facility, subject to various terms and conditions, including compliance with the covenants which could further limit the amount available, of the Credit Agreement that governs the Credit Facility. Because of these covenant limitations, as of November 6, 2025 and September 30, 2025, approximately $36 million and $53 million, respectively, was available to draw as additional debt under the Revolving Credit Facility. As of November 6, 2025 and September 30, 2025, a total of 48 and 47 properties, respectively, out of our 52 properties comprised the borrowing base for the Credit Facility. The properties comprising the borrowing base for the Credit Facility are not available to be used as collateral for other debt unless removed from the borrowing base, which would shrink availability under the Credit Facility.

On October 30, 2025, we drew $17 million on the Revolving Credit Facility to repay indebtedness secured by a mortgage on The Village at Burlington Creek property, which had an outstanding principal balance of $16.1 million and was repaid in full on October 31, 2025. Subsequent to the payoff, the property was added to the borrowing base for the Credit Facility. As of November 6, 2025, over the next 12 months we have three mortgage loans maturing with an aggregate principal balance of $121.3 million. The weighted average interest rate on these three mortgage loans was 3.93% per annum as of September 30, 2025, which includes the effects of interest rate swaps. We expect to amend the agreement governing our Revolving Credit Facility and Term Loan. The amendment will increase the amount available under the revolving portion of the facility and extend the maturity date. If the amendment is completed, we expect to draw on the facility to repay our balance on the maturing mortgage loans. The interest rate on draws under the facility will be greater than the rate on the maturing mortgage loans. If we do not enter into an amendment, we would have to reevaluate options for repaying the maturing debt. Borrowings under the Revolving Credit Facility may limit our ability to operate our business including paying distributions to our stockholders. See Item 1A. - "Risk Factors - The financial covenants under our credit agreement may restrict our ability to make distributions and our operating and acquisition activities. If we breach the financial covenants we could be held in default under the credit agreement, which could accelerate our repayment date and materially adversely affect our liquidity and

financial condition" and "- Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur"for further information.

During the nine months ended September 30, 2025, we invested $12.1 million on capital expenditures and tenant improvements, which is approximately $2.1 million more than we did during the nine months ended September 30, 2024. For the remainder of 2025, we anticipate investing approximately $10.0 million for capital expenditures and tenant improvements. Capital expenditures and tenant improvements are funded by cash flows generated from operations during current or prior periods.

As of September 30, 2025, we have paid all interest and principal amounts when due, and were in compliance with all financial covenants under the Credit Facility as amended.

Cash Flow Analysis

Nine Months Ended
September 30,

Change

2025

2024

2025 vs. 2024

(Dollar amounts in thousands)

Net cash flows provided by operating activities

$

39,150

$

38,950

$

200

Net cash flows used in investing activities

$

(12,106

)

$

(10,052

)

$

(2,054

)

Net cash flows used in financing activities

$

(21,958

)

$

(23,961

)

$

2,003

Operating activities

The increase in cash from operating activities during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to lower interest expense partially offset by timing of receipts from tenants.

Investing activities

Nine Months Ended
September 30,

Change

2025

2024

2025 vs. 2024

(Dollar amounts in thousands)

Capital expenditures

$

(12,106

)

$

(10,052

)

$

(2,054

)

Net cash used in investing activities

$

(12,106

)

$

(10,052

)

$

(2,054

)

The increase in cash used in investing activities during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was due to an increase in capital expenditures.

Financing activities

Nine Months Ended
September 30,

Change

2025

2024

2025 vs. 2024

(Dollar amounts in thousands)

Total net changes related to debt

$

(7,266

)

$

(9,254

)

$

1,988

Proceeds from DRP

-

5,001

(5,001

)

Shares repurchased

-

(5,001

)

5,001

Distributions paid

(14,692

)

(14,707

)

15

Net cash used in financing activities

$

(21,958

)

$

(23,961

)

$

2,003

During the nine months ended September 30, 2025, changes in total debt decreased $2.0 million from the nine months ended September 30, 2024 primarily due to lower net repayment on the Credit Facility in 2025 compared to 2024. During the nine months ended September 30, 2025, we paid $14.7 million in distributions on our common stock. As noted herein, the DRP and SRP were both suspended effective October 1, 2024.

Distributions

Distributions when declared are paid quarterly in arrears. A summary of the distributions declared, distributions paid and cash flows provided by operations for the nine months ended September 30, 2025 and 2024 follows (Dollar amounts in thousands except per share amounts):

Distributions Paid (1)

Nine Months Ended
September 30,

Distributions
Declared

Distributions
Declared Per
Share

Cash

Reinvested
via DRP

Total

Cash Flows
From
Operating Activities

2025

$

14,692

$

0.406800

$

14,692

$

-

$

14,692

$

39,150

2024

$

14,698

$

0.406800

$

9,706

$

5,001

$

14,707

$

38,950

(1)
Distributions were funded by cash flows from operating activities during the nine months ended September 30, 2025 and 2024.

Results of Operations

This section describes and compares our results of operations for the three and nine months ended September 30, 2025 and 2024. Dollar amounts are stated in thousands.

We generate our net operating income from property operations. All 52 investment properties we currently own were held for the entirety of both the three and nine months ended September 30, 2025 and 2024.

Net operating income is a supplemental non-GAAP performance measure that we believe is useful to investors in measuring the operating performance of our property portfolio because our primary business is the ownership of real estate, and net operating income excludes various items included in GAAP net income that do not relate to, or are not indicative of, our property operating performance, such as depreciation and amortization and parent-level corporate expenses (including general and administrative expenses).

The following tables present the property net operating income prior to straight-line income (expense), net, amortization of intangibles, interest, and depreciation and amortization for the three and nine months ended September 30, 2025 and 2024, along with a reconciliation to net loss, calculated in accordance with GAAP.

Comparison of the three months ended September 30, 2025 and 2024

Three Months Ended
September 30,

2025

2024

Change

(Dollar amounts in thousands)

Rental income

$

37,187

$

36,863

$

324

Other property income

123

141

(18

)

Total income

37,310

37,004

306

Property operating expenses

7,475

7,413

62

Real estate tax expense

4,716

4,483

233

Total property operating expenses

12,191

11,896

295

Property net operating income

25,119

25,108

11

Straight-line income (expense), net

464

155

309

Amortization of intangibles and lease incentives

42

11

31

General and administrative expenses

(1,262

)

(1,332

)

70

Business management fee

(2,251

)

(2,236

)

(15

)

Depreciation and amortization

(14,302

)

(14,610

)

308

Interest expense

(9,824

)

(10,402

)

578

Interest and other income

53

99

(46

)

Net loss

$

(1,961

)

$

(3,207

)

$

1,246

Net loss. Net loss was $1,961 and $3,207 for the three months ended September 30, 2025 and 2024, respectively.

Total property net operating income. During the three months ended September 30, 2025, property net operating income increased $11, total property income increased $306, and total property operating expenses including real estate tax expense increased $295.

The increase in total property income is primarily due to an increase in base rent in new leases and step-up rent on existing leases, and an increase in tenant recovery income. The increase in property operating expenses is primarily due to increases in the following: (i) $259 in repairs and maintenance expense due to the timing of projects, and (ii) $86 in insurance expense, partially offset by decreases in the following: (a) $202 in expense recoveries, and (b) $85 in property management fees.

Straight-line income (expense), net. Straight-line income (expense), net increased $309 in 2025 compared to 2024. The increase is primarily due to an increase in rent abatements on new leases in 2025.

Amortization of intangibles and lease incentives. Income from the amortization of intangibles and lease incentives increased $31 in 2025 compared to 2024. The increase is primarily due to write-off of below market leases due to early tenant move-outs.

General and administrative expenses.General and administrative expenses decreased $70 in 2025 compared to 2024. The decrease is primarily due to a decrease in professional fees in 2025.

Business management fee. Business management fees increased $15 in 2025 compared to 2024.

Depreciation and amortization.Depreciation and amortization decreased $308 in 2025 compared to 2024. The decrease is primarily due to a larger amount of fully amortized assets in 2025 compared to 2024.

Interest expense.Interest expense decreased $578 in 2025 compared to 2024. The decrease is primarily due to lower average debt outstanding and a lower average interest rate.

Interest and other income.Interest and other income decreased $46 in 2025 compared to 2024.

Comparison of the nine months ended September 30, 2025 and 2024

Nine Months Ended
September 30,

2025

2024

Change

Rental income

$

112,823

$

111,023

$

1,800

Other property income

259

321

(62

)

Total income

113,082

111,344

1,738

Property operating expenses

23,745

21,809

1,936

Real estate tax expense

13,824

13,976

(152

)

Total property operating expenses

37,569

35,785

1,784

Property net operating income

75,513

75,559

(46

)

Straight-line income (expense), net

1,146

558

588

Amortization of intangibles and lease incentives

178

(105

)

283

General and administrative expenses

(4,583

)

(4,310

)

(273

)

Business management fee

(6,738

)

(6,722

)

(16

)

Depreciation and amortization

(43,039

)

(43,763

)

724

Interest expense

(29,343

)

(31,218

)

1,875

Interest and other income

148

253

(105

)

Net loss

$

(6,718

)

$

(9,748

)

$

3,030

Net loss. Net loss was $6,718 and $9,748 for the nine months ended September 30, 2025 and 2024, respectively.

Total property net operating income. During the nine months ended September 30, 2025, property net operating income decreased $46, total property income increased $1,738, and total property operating expenses including real estate tax expense increased $1,784.

The increase in total property income is primarily due to an increase in base rent in new leases and step-up rent on existing leases, and an increase in tenant recovery income. The increase in property operating expenses is primarily due to increases in the following: (i) $624 in snow removal costs, (ii) $436 in repairs and maintenance expense due to the timing of projects, (iii) $318 in non-recoverable expenses, (iv) $274 in legal costs, (v) $257 in insurance expense and (vi) $177 in utilities, partially offset by a decrease of $151 in expense recoveries.

Straight-line income (expense), net. Straight-line income (expense), net increased $588 in 2025 compared to 2024. The increase is primarily due to an increase in rent abatements on new leases and lower straight-line write-offs in 2025 compared to 2024.

Amortization of intangibles and lease incentives. Income from/ the amortization of intangibles and lease incentives increased $283 in 2025 compared to 2024. The increase is primarily due to write-off of below market leases due to early tenant move-outs and fully amortized intangible assets.

General and administrative expenses.General and administrative expenses increased $273 in 2025 compared to 2024. The increase is primarily due to costs incurred for professional fees in connection with the review of strategic alternatives.

Business management fee. Business management fees increased $16 in 2025 compared to 2024.

Depreciation and amortization.Depreciation and amortization decreased $724 in 2025 compared to 2024. The decrease is primarily due to a larger amount of fully amortized assets in 2025 compared to 2024.

Interest expense.Interest expense decreased $1,875 in 2025 compared to 2024. The decrease is primarily due to lower average debt outstanding and a lower average interest rate.

Interest and other income.Interest and other income decreased $105 in 2025 compared to 2024.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Estimates

"Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates"of our 2024 Annual Report on Form 10-K, filed with the SEC on March 5, 2025, contains a description of our critical accounting estimates. There have been no changes to our critical accounting estimates during the nine months ended September 30, 2025.

Leasing Activity

The following table sets forth leasing activity during the nine months ended September 30, 2025. Leases with terms of less than 12 months have been excluded from the table.

Number of Leases Signed

Gross Leasable Area

New Contractual Rent per Square Foot

Prior Contractual Rent per Square Foot

% Change over Prior Annualized Base Rent

Weighted Average Lease Term

Tenant Allowances per Square Foot

Comparable Renewal Leases

67

387,463

$

23.33

$

21.85

6.8

%

4.9

$

-

Comparable New Leases

10

42,291

$

32.69

$

28.76

13.7

%

9.3

$

45.43

Non-Comparable New and Renewal Leases (a)

37

166,474

$

15.21

N/A

N/A

6.6

$

15.22

Total

114

596,228

(a)
Includes leases signed on units that were vacant for over 12 months, leases signed without fixed rent amounts and leases signed where the previous and current lease do not have similar lease structures.

Non-GAAP Financial Measures

Accounting for real estate assets in accordance with GAAP assumes the value of real estate assets is reduced over time due primarily to non-cash depreciation and amortization expense. Because real estate values may rise and fall with market conditions, operating results from real estate companies that use GAAP accounting may not present a complete view of their performance. We use Funds from Operations, or "FFO", a widely accepted metric to evaluate our performance. FFO provides a supplemental measure to compare our performance and operations to other REITs. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or "NAREIT", has promulgated a standard known as FFO, which it believes more accurately reflects the operating performance of a REIT. On November 7, 2018, NAREIT's Executive Board approved the White Paper restatement, effective December 15, 2018. The purpose of the restatement was not to change the fundamental definition of FFO but to clarify existing guidance. The restated definition of FFO by NAREIT is net income (loss) computed in accordance with GAAP, excluding depreciation and amortization related to real estate, excluding gains (or losses) from sales of certain real estate assets, excluding impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate and excluding gains and losses from change in control. We have adopted the restated NAREIT definition for computing FFO. Previously presented periods were not impacted.

Under GAAP, acquisition related costs are treated differently if the acquisition is a business combination or an asset acquisition. An acquisition of a single property will likely be treated as an asset acquisition as opposed to a business combination and acquisition related costs will be capitalized rather than expensed when incurred. Publicly registered, non-listed REITs typically engage in a significant amount of acquisition activity in the early years of their operations, and thus incur significant acquisition related costs, during these initial years. Although other start up entities may engage in significant acquisition activity during their initial years, publicly registered, non-listed REITs are unique in that they typically have a limited timeframe during which they acquire a significant number of properties and thus incur significant acquisition related costs. Due to the above factors and other unique features of publicly registered, non-listed REITs, the Institute for Portfolio Alternatives, or "IPA", an industry trade group, published a standardized measure known as Modified Funds from Operations, or "MFFO", which the IPA has promulgated as a supplemental measure for publicly registered non-listed REITs and which may be another appropriate supplemental measure to reflect the operating performance of a non-listed REIT. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year-over-year, it reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

MFFO excludes expensed costs associated with investing activities, some of which are acquisition related costs that affect our operations only in periods in which properties are acquired, and other non-operating items that are included in FFO, such as straight-lining of rents as required by GAAP. By excluding costs that we consider more reflective of acquisition activities and other non-operating items, the use of MFFO provides another measure of our operating performance once our portfolio is stabilized. Because MFFO may be a recognized measure of operating performance within the non-listed REIT industry, MFFO and the adjustments used to calculate it may be useful in order to evaluate our performance against other non-listed REITs. Like FFO, MFFO is not equivalent to our net income or loss as determined under GAAP, as detailed in the table below, and MFFO may not be a useful measure of the impact of long-term operating performance on value if we continue to acquire a significant amount of properties. MFFO should only be used as a measurement of our operating performance while we are acquiring a significant amount of properties because it excludes, among other things, acquisition costs incurred during the periods in which properties were acquired.

We believe our definition of MFFO, a non-GAAP measure, is consistent with the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations, or the "Practice Guideline," issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to straight-line rents and amortization of above and below market lease assets and liabilities, accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

Our presentation of FFO and MFFO may not be comparable to other similarly titled measures presented by other REITs. We believe that the use of FFO and MFFO provides a more complete understanding of our operating performance to stockholders and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs. Neither FFO nor MFFO is intended to be an alternative to "net income" or to "cash flows from operating activities" as determined by GAAP as a measure of our capacity to pay distributions. Management uses FFO and MFFO to compare our operating performance to that of other REITs and to assess our operating performance.

Our FFO and MFFO for the nine months ended September 30, 2025 and 2024 are calculated as follows:

Nine Months Ended
September 30,

2025

2024

(Dollar amounts in thousands)

Net loss

$

(6,718

)

$

(9,748

)

Add:

Depreciation and amortization related to investment properties

43,039

43,763

Funds from operations (FFO)

36,321

34,015

Less:

Amortization of acquired lease intangibles, net

(335

)

(50

)

Straight-line (income) expense, net

(1,146

)

(558

)

Modified funds from operations (MFFO)

$

34,840

$

33,407

Subsequent Events

For information related to subsequent events, reference is made to Note 14 - "Subsequent Events"which is included in our September 30, 2025 Notes to Consolidated Financial Statements in Item 1.

Inland Real Estate Income Trust Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 18:41 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]