Item 1.01. Entry into a Material Definitive Agreement.
The information discussed under Items 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On the date indicated below,
Inland Real Estate Income Trust, Inc.(referred to herein as "us," "we," "our" or the "Company") acquired the following property. For purposes of this table, dollar amounts are stated in millions, except for per square foot amounts: Total Approx. Average Square Purchase Average Remain- Feet or Price Annualized ing Number Paid Cap Approx. Base
Rent Lease Economic
Property Date of at Rate Annualized per Square Term in Occupancy Physical
Name Acquired Units Closing (1) Base Rent (2) Foot (2) Years (3) Occupancy
MidTowne Shopping 5/13/14 126,288
$41.456.51% $2.20 $18.175 years 95.6% 95.6% Center -- Little Rock, AR (1) We determine capitalization rate, or "cap rate," by dividing the property's annualized net operating income ("NOI"), existing at the date of acquisition, by the contract purchase price of the property paid at the date of acquisition (excluding amounts payable under earnout agreements as of the date of acquisition). NOI consists of, for these purposes, rental income and expense reimbursements from in-place leases, including master leases, if any, reduced by operating expenses and existing vacancies. (2) Annualized base rent is calculated by annualizing the current, in-place monthly base rent for leases at the time of acquisition, including any tenant concessions, such as rent abatement or allowances, that may have been granted. Rental income for The Container Store, Pottery Barnand Williams Sonoma is based on tenant gross sales and is not included in annualized base rent. (3) As used herein, economic occupancy is defined as the percentage of total gross leasable area for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupation by that tenant of the area being leased. MidTowne Shopping Center. On May 13, 2014, we, through IREIT Little Rock MidTowne, L.L.C.and IREIT Little Rock MidTowne II, L.L.C.(the "MidTowne Subsidiaries"), each a wholly owned subsidiary formed for this purpose, acquired a fee simple interest in a 126,288 square foot retail center known as MidTowne Shopping Center, located in Little Rock, Arkansas. The property is located across the street from the Park Avenue Shopping Centerwhich we acquired on February 21, 2014. We purchased this property from IMI MRLR LLCand IMI MTLR II LLC, both unaffiliated third parties, for approximately $41.45 millionin cash, plus closing costs. The seller had previously entered into a purchase agreement with IREIT Business Manager & Advisor, LLC, our Business Manager, which was assigned to us by our Business Manager on April 21, 2014. At closing we assigned the purchase agreement to the MidTowne Subsidiaries. We funded the purchase price at the closing with proceeds from our offering. We expect to pay our Business Manager an acquisition fee of approximately $621,750based on the purchase price of approximately $41.45 million. We expect to fund the acquisition fee from offering proceeds. The capitalization rate for this property was approximately 6.51%. 2
Among the items we considered in determining to acquire
· The property is located nearby the
numerous other medical facilities.
· The property is 95.6% occupied.
· We believe the property is well situated in
three mile radius of the property the current population is over 73,000, with
an average household income of approximately
Shopping Center which we acquired on
proximity of the two shopping centers will create cost synergies for our
As of the date of this supplement,
MidTowne Shopping Centerwas 95.6% occupied and leased to 22 tenants. The weighted-average remaining lease term for the tenants occupying the property is approximately 5 years. There is one tenant occupying greater than 10% of the total gross leasable area of the property. The Container Store, a national specialty retail store, leases 23,565 square feet, or approximately 18.7% of the total gross leasable area of the property, and pays annual rent in an amount based on their gross sales. The Container Store's lease expires in February 2019, and there are three 5-year renewal options, which may be exercised at the option of The Container Store as set forth in the lease. The other tenants leasing at least 10,000 square feet are Pottery Barn(11,000 square feet) and Ulta Salon, Cosmetics & Fragrance, Inc. (10,434 square feet). 3 The following table lists, on an aggregate basis, all of the scheduled lease expirations over each of the years ending December 31, 2014through 2023, and the approximate rentable square feet represented by the applicable lease expirations, at the property. % of Approx. Gross Total Annual Base Total Annual Base Number of Leasable Area of Rental Income of Rental Income Year Ending Leases Expiring Leases Expiring Leases Represented by December 31 Expiring (Sq. Ft.) ($) (1) Expiring Leases (1) 2014 1 1,600 43,200 2.0% 2015 - - - - 2016 7 21,487 616,223 28.5% 2017 5 21,353 594,472 38.2% 2018 1 6,968 245,274 24.6% 2019 3 41,065 - - 2020 1 2,893 131,580 17.4% 2021 1 3,500 87,500 14.0% 2022 1 10,434 239,982 44.5% 2023 1 8,478 211,950 70.8% (1) Total annual base rental income is not included for the 41,065 square feet leased to The Container Store, Pottery Barnand Williams Sonoma expiring in 2019 due to annual rent is based on tenant gross sales. The table below sets forth certain historical information with respect to the occupancy rate at the property for each of the last five years, expressed as a percentage of total gross leasable area, and the average effective annual base rent per square foot. Average Effective Occupancy Rate Annual Base Rent
$24.262012 91.0% $23.892011 83.3% $24.152010 83.3% $23.792009 83.3% $23.55
We believe that the property is suitable for its intended purpose and adequately covered by insurance. We do not intend to make significant renovations or improvements. There are three competitive shopping centers located within approximately three miles of the property.
Real estate taxes assessed for the fiscal year ended
December 31, 2013were approximately $227,500. The amount of real estate taxes assessed was calculated by multiplying the property's assessed value by a tax rate of approximately 7.01%. We will calculate depreciation expense for federal income tax purposes by using the straight-line method. For federal income tax purposes, we depreciate buildings and land improvements based upon estimated useful lives of 40 and 20 years, respectively. 4