Executive Summary / Key Takeaways

• Strategic Sun Belt Focus: InvenTrust Properties Corp. ($IVT) is a premier multi-tenant essential retail REIT strategically concentrated in high-growth Sun Belt markets, primarily owning grocery-anchored neighborhood and community centers. This focus leverages favorable demographics, limited new supply, and resilient consumer behavior to drive consistent performance.
• Robust Operational Execution: The company consistently delivers strong operational results, evidenced by Q3 2025 same-property NOI growth of 6.4%, high total leased occupancy of 97.2%, and healthy blended leasing spreads of 11.5%. Proactive asset management and embedded rent escalators are key drivers.
• Disciplined Capital Recycling: IVT successfully executed a "tactical reallocation of capital" by disposing of a California portfolio for $306 million, redeploying proceeds into higher-growth Sunbelt assets, enhancing its portfolio quality and long-term growth prospects.
• Fortified Balance Sheet & Liquidity: With a net debt to adjusted EBITDA of 4x and $571 million in liquidity as of Q3 2025, coupled with extended debt maturities and fixed-rate swaps, IVT maintains a strong financial position, enabling opportunistic acquisitions without heavy reliance on volatile capital markets.
• Positive Outlook with Prudent Caution: Management raised full-year 2025 guidance for same-property NOI (4.75%-5.25%) and FFO, reflecting confidence in its strategy, while incorporating a prudent bad debt reserve and acknowledging potential Q4 deceleration due to backloaded expenses.

The Sun Belt's Retail Anchor: IVT's Enduring Strategy

InvenTrust Properties Corp. ($IVT) has carved out a distinct niche as a premier multi-tenant essential retail REIT, strategically concentrating its portfolio in the burgeoning Sun Belt region. Since its inception as Inland American Real Estate Trust, Inc. in 2004 and its subsequent rebranding to InvenTrust Properties Corp. in 2015, the company has honed its focus on owning, leasing, redeveloping, acquiring, and managing grocery-anchored neighborhood and community centers, alongside high-quality power centers that often feature a grocery component. This deliberate strategy, which saw the company go public in 2021, has yielded impressive results, with FFO per share increasing by nearly 30% over the subsequent four years leading up to Q3 2025. Total portfolio leased occupancy also climbed significantly, from 93.0% at listing to 97.4% by the end of 2024.

The company's success is deeply rooted in its "proven playbook" that emphasizes maintaining high occupancy, embedding contractual rent escalators, achieving strong tenant retention, securing healthy renewal spreads, and pursuing selective, accretive acquisitions. This approach is particularly potent in the Sun Belt, a region characterized by "extraordinary population and employment growth, business and tax-friendly policies, and favorable climate and quality of life." These macroeconomic tailwinds create robust demand for necessity-based retail, positioning IVT to capitalize on future rent increases and sustained occupancy.

IVT's operational strength is further amplified by its "hub-and-spoke operating model." This strategic approach enables efficient management of a broad network of top-tier assets across Sun Belt markets with minimal incremental general and administrative (G&A) impact. The model provides both operating leverage and flexibility, allowing the company to scale efficiently while maintaining hands-on oversight and in-depth local market knowledge. This operational differentiator, coupled with a proactive asset management approach that prioritizes relationship building and real-time market awareness, enhances tenant retention and portfolio stability. The company also invests selectively in property enhancements to improve curb appeal, energy efficiency, and overall tenant and consumer experiences, sustaining the long-term competitiveness of its centers.

The competitive landscape for retail REITs, particularly in the grocery-anchored segment, is robust, with significant institutional interest from both public and private operators. Direct competitors like Realty Income Corporation (O), Kimco Realty Corporation (KIM), Federal Realty Investment Trust (FRT), and Brixmor Property Group (BRX) also vie for market share. While Realty Income's single-tenant net lease model offers broad geographic reach and streamlined operations, IVT's multi-tenant, grocery-anchored focus in high-growth Sun Belt markets provides a specialized advantage in fostering vibrant retail ecosystems. Against Kimco and Brixmor, who also target open-air centers, IVT differentiates itself through its redevelopment expertise and disciplined capital allocation in demographically favorable regions. Federal Realty's mixed-use urban strategy contrasts with IVT's suburban essential retail focus, where IVT aims for stronger resilience in regional economic cycles. IVT's primary competitive advantages lie in its localized market expertise and its ability to execute targeted redevelopments, which can lead to superior tenant stability and market positioning in expanding regions. However, IVT's smaller scale compared to some larger rivals could present vulnerabilities in terms of overall operational efficiency and broader strategic adaptability.

Financial Performance and Operational Excellence

InvenTrust's strategic execution is clearly reflected in its financial performance. For the third quarter ended September 30, 2025, the company reported a net income of $6.0 million, a significant turnaround from a net loss of $0.5 million in the same period of 2024. Lease income, net, for the three months ended September 30, 2025, increased by $5.887 million to $74.019 million compared to the prior year.

Operational metrics underscore the company's strength. Same-property Net Operating Income (NOI) for Q3 2025 grew by 6.4% to $44.284 million, and year-to-date, it increased by 5.9% to $128.336 million over the first nine months of 2024. This growth was primarily driven by embedded rent escalations (160 basis points), occupancy gains (100 basis points), positive rent spreads (100 basis points), redevelopment activity (60 basis points), percentage and ancillary rents (60 basis points), and a 220 basis point lift from net expense reimbursements. These gains were partially offset by a 60 basis point impact from the bad debt reserve. Core FFO per diluted share for Q3 2025 increased by 6.8% to $0.47, driven by same-property NOI and net acquisition activity.

Occupancy levels remain exceptionally high, with total leased occupancy at 97.2% as of September 30, 2025. Small shop lease occupancy reached a portfolio high of 93.8%, while anchor space occupancy stood at 99.3%. The company's leasing activity continues to be robust, with new leases in Q3 2025 achieving a 25.6% spread and renewals averaging 10.4%, resulting in a blended leasing spread of 11.5%. Notably, over 90% of renewal leases include annual rent escalators of 3% or more, providing a powerful driver for sustainable NOI growth. The year-to-date tenant retention rate was 82%, or 89% excluding a single anchor space undergoing redevelopment.

IVT maintains a robust financial position. As of September 30, 2025, total liquidity stood at $571 million, including $71 million in cash and the full $500 million available under its revolving credit facility. The company's weighted average interest rate is 3.98%, and its net leverage ratio is 24%. Net debt to adjusted EBITDA remained at a sector-low 4x on a trailing 12-month basis. In August 2025, IVT proactively managed its debt profile by extending the maturity dates of its $400 million term loans to August 2030 and February 2031, increasing its weighted average maturity to 4.7 years. This move was complemented by entering into four forward-starting interest rate swap agreements, locking in fixed rates of 4.5% and 4.58% for future periods.

Strategic Capital Allocation and Growth Initiatives

A cornerstone of IVT's strategy is its disciplined capital allocation, particularly its "tactical reallocation of capital" from non-core assets to higher-growth opportunities. In June 2025, the company completed the disposition of a five-property California portfolio for approximately $306 million, marking a significant step towards its full exit from the state by year-end 2025. This move was described as a "rare and highly accretive rotation of capital," allowing IVT to upgrade its portfolio materially in markets with stronger growth prospects.

The proceeds from these dispositions have been swiftly redeployed into a series of strategic acquisitions in the Sun Belt. In Q3 2025 alone, IVT completed four acquisitions totaling $250 million. These included Asheville Market in Asheville, North Carolina, a 130,000 square foot community center anchored by Whole Foods Market, acquired for $45.70 million, and Rea Farms in Charlotte, North Carolina, a 183,000 square foot community center anchored by Harris Teeter, acquired for $80 million. Other notable acquisitions included The Marketplace at Encino Park in San Antonio, Texas, and West Broad Marketplace in Richmond, Virginia. These properties align perfectly with IVT's focus on strong grocery anchors, exceptional demographics, and embedded rent growth potential.

The company's acquisition pipeline remains robust, with management indicating they are consistently evaluating over $1 billion of assets at any given time. While prioritizing grocery-anchored centers, IVT remains "format agnostic," seeking properties that enhance its portfolio with high-quality, necessity-based tenants in high-growth Sun Belt markets. This disciplined approach ensures that new investments are accretive and align with the company's strict return thresholds. Looking ahead, management anticipates that capital expenditures for leasing and tenant improvements will decrease in mid-2026 as occupancy stabilizes, which should lead to "greater free cash flow".

Outlook and Risk Assessment

InvenTrust's management has expressed confidence in its strategic direction, raising its full-year 2025 same-property NOI growth guidance to a range of 4.75% to 5.25%. The bad debt reserve guidance was reduced to 55 to 75 basis points of total revenue, reflecting a minimal exposure to bankruptcies and an actively monitored watch list. The midpoint of NAREIT FFO guidance was increased to $1.87 per diluted share, and the low end of Core FFO guidance was raised to a range of $1.80 to $1.83 per diluted share. Net investment guidance was revised to a range of $49.6 million to $158.6 million, primarily reflecting the timing of awarded deals that may close in late 2025 or early 2026.

Management expects some deceleration in the fourth quarter, primarily due to property operating expenses being more backloaded and the remaining bad debt reserve. However, visibility into future cash flows remains strong, with approximately 90% of 2026 leasing already executed. The company believes that its same-store NOI growth, which has been "surprisingly sticky" above 4% in recent years, appears sustainable, driven by higher escalators and near-frictional occupancy.

Despite this positive outlook, IVT acknowledges several macroeconomic risks. While Sun Belt consumer behavior remains resilient, management is monitoring rising household debt levels and weakened consumer confidence. Uncertain and evolving tariffs and trade issues also contribute to overall economic uncertainty and could adversely impact tenants' operations. The company's concentration in Sun Belt markets, while a strength, also poses exposure to regional economic swings. However, IVT's focus on essential retail and its high-quality tenant base, which management describes as "far superior" to past years, provides a degree of resilience against these potential headwinds.

Conclusion

InvenTrust Properties Corp. presents a compelling investment thesis grounded in its focused Sun Belt strategy, robust operational execution, and disciplined capital allocation. The company's history of strategic evolution, culminating in its current emphasis on grocery-anchored essential retail, has positioned it to capitalize on favorable demographic shifts and limited new supply in its target markets. Strong financial performance, characterized by consistent same-property NOI growth, high occupancy, and healthy leasing spreads, reflects an effective "hub-and-spoke" operational model that maximizes efficiency and local market insight.

The successful capital recycling from California into higher-growth Sun Belt assets underscores IVT's commitment to portfolio optimization and accretive growth. With a fortified balance sheet and ample liquidity, the company is well-equipped to pursue opportunistic acquisitions while maintaining financial flexibility. While macroeconomic uncertainties and potential for Q4 deceleration warrant prudent monitoring, IVT's strong tenant base, embedded lease escalators, and significant visibility into future leasing activity provide a solid foundation for sustainable cash flow growth. For discerning investors, IVT offers a resilient and strategically positioned REIT poised for continued value creation in the dynamic retail real estate landscape.