In Millions | Inland Western Retail | Inland American | Inland Diversified |
Total Assets | $6,387 | $11,392 | $450 |
Total Liabilities | $4,090 | $5,864 | $224 |
Equity Raised | $4,595 | $8,325 | $260 |
Net Real Estate | $5,686 | $9,563 | $313 |
Direct Debt | $3,603 | $5,532 | $193 |
Leverage Ratio | 63.3% | 57.8% | 61.5% |
Revenue | $647 | $1,232 | $19 |
Net Income | ($85) | ($176) | ($2) |
FFO | $135 | $253 | $3.9 |
Mod Cash Flow[1] | $153 | $442 | $5.8 |
Dividends | $95 | $418 | $8.4 |
Yield ($10 share) | 2.0% | 5.0% | 6.0% |
Inland Diversified opened its offering in August 2009 and is raising funds at a reasonable pace. At December 31, 2010, the REIT had $450 million of assets including $313 million of real estate owned directly. The company generated $19 million total revenue and a $2 million net loss. The shareholder 6% dividend is 46% covered by Funds from Operations and 69% by Modified Cash Flow. While subsidizing dividends is common during the capital raising phase, especially this early, continuing the practice of distributing funds in excess of those generated will result in the dilution of shareholder equity.
Inland American closed its offering in April 2009. At December 31, 2010, the REIT had $11.4 billion of assets including $9.6 billion of real estate owned directly. Inland American realized $1.2 billion total revenue and a $176 million net loss. The shareholder 5% dividend is 60% covered by Funds from Operations and 106% by Modified Cash Flow. The company reported approximately $168 million of asset impairments during 2010, partially offset by about $22 million of realized gains. The REIT appears to be managing its cash flow prudently, having already reduced its dividend to 5%. However, it has recorded significant impairments and losses over the past three years. Therefore, it would not be a surprise if share values are significantly lower than the original $10 share price, or even the current $8.03 DRIP price.
Inland Western Retail completed an internalization of its management in November 2007 and therefore has no formal affiliation with The Inland Group. At December 31, 2010, the REIT had $6.4 billion of assets including $5.7 billion of real estate owned directly. Inland Western realized $647 million total revenue and a $85 million net loss. The shareholder 1.96% dividend is 142% covered by Funds from Operations and 162% by Modified Cash Flow. The REIT's operations have been severely adversely affected over the past three years by economic and market conditions. Over this period, Inland Western has recorded impairments and realized net losses on the order of $659 million, partially offset by realized gains of $50 million from the sale of properties associated with discontinued operations. The company also worked through significant debt refinancings over 2009 and 2010, and continues to negotiate with lenders on the remainder of the debt portfolio. Close maturities include a $154 million line of credit due in 2011, $646 million of fixed rate and $26 million of variable rate debt in 2011, $411 million fixed and $88 million variable due in 2012, and $320 million of fixed rate mortgages due in 2013. While the REIT's management has worked diligently to preserve the value of the company's assets, it would not be unreasonable to estimate share value approximately equal to book value of $4.81 per share.
Inland Western has filed a Form S-11 with the SEC indicating its intention to list the shares on a stock exchange.
[1] Modified Cash Flow is an Clarity Finance measure which equals (1) net income plus (2) depreciation and amortization, plus (3) acquisition fees and expenses, less (plus) (4) any realized or provisions for capital gains (losses) on the income statement, less (plus) (5) income (losses) from unconsolidated entities, plus (6) distributions from unconsolidated entities.
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