10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO ____________

COMMISSION FILE NUMBER: 000-55146

Inland Real Estate Income Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	45-3079597
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2901 Butterfield Road, Oak Brook, Illinois	60523
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 630-218-8000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

As of May 6, 2019, there were 35,690,942 shares of the registrant’s common stock, $.001 par value, outstanding.

INLAND REAL ESTATE INCOME TRUST, INC.

TABLE OF CONTENTS

		Page
	Part I - Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018	3
	Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months ended March 31, 2019 and 2018 (unaudited)	4
	Consolidated Statements of Equity for the three months ended March 31, 2019 and 2018 (unaudited)	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
	Part II - Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
Signatures		36

2

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited, dollar amounts in thousands, except per share amounts) 

	March 31, 2019 (unaudited)			December 31, 2018
ASSETS
Assets:
Investment properties:
Land	$	277,229		$	277,229
Building and other improvements		1,022,042			1,021,607
Total		1,299,271			1,298,836
Less accumulated depreciation		(148,719	)		(139,134	)
Net investment properties		1,150,552			1,159,702
Cash and cash equivalents		13,023			15,239
Restricted cash		1,001			1,001
Accounts and rent receivable, net		16,441			16,176
Acquired lease intangible assets, net		109,612			115,357
Deferred costs, net		2,744			2,570
Operating lease right-of-use asset, net		15,840			—
Other assets		6,854			10,024
Total assets	$	1,316,067		$	1,320,069
LIABILITIES AND EQUITY
Liabilities:
Mortgages and credit facility payable, net	$	705,980		$	705,884
Accounts payable and accrued expenses		9,652			8,849
Operating lease liability		23,455			—
Distributions payable		10,741			11,924
Acquired intangible liabilities, net		51,485			57,462
Due to related parties		2,715			2,604
Other liabilities		10,125			16,268
Total liabilities		814,153			802,991
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value, 40,000,000 shares authorized, none outstanding		—			—
Common stock, $.001 par value, 1,460,000,000 shares authorized, 35,447,385 and   35,343,256 shares issued and outstanding as of March 31, 2019 and December    31, 2018, respectively		35			35
Additional paid in capital		798,483			795,409
Accumulated distributions and net loss		(297,443	)		(283,859	)
Accumulated other comprehensive income		839			5,493
Total stockholders’ equity		501,914			517,078
Total liabilities and stockholders’ equity	$	1,316,067		$	1,320,069

See accompanying notes to consolidated financial statements.

3

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Unaudited, dollar amounts in thousands, except per share amounts) 

	Three Months Ended March 31,
	2019			2018
Income:
Rental income	$	32,422		$	32,540
Other property income		53			108
Total income		32,475			32,648
Expenses:
Property operating expenses		5,675			5,810
Real estate tax expense		4,248			4,501
General and administrative expenses		1,512			1,116
Acquisition related costs		—			(7	)
Business management fee		2,333			2,328
Depreciation and amortization		14,526			14,760
Total expenses		28,294			28,508
Operating income		4,181			4,140
Interest expense		(7,153	)		(6,467	)
Interest and other income		19			87
Net loss	$	(2,953	)	$	(2,240	)
Net loss per common share, basic and diluted	$	(0.08	)	$	(0.06	)
Weighted average number of common shares outstanding, basic    and diluted		35,583,398			35,594,052
Comprehensive (loss) income:
Net loss	$	(2,953	)	$	(2,240	)
Unrealized (loss) gain on derivatives		(4,200	)		4,826
Reclassification adjustment for amounts included in net loss		(454	)		133
Comprehensive (loss) income	$	(7,607	)	$	2,719

See accompanying notes to consolidated financial statements.

4

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, dollar amounts in thousands) 

For the three months ended March 31, 2019:

	Number of Shares			Common Stock		Additional Paid in Capital			Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Income			Total
Balance at December 31, 2018		35,343,256		$	35	$	795,409		$	(283,859	)	$	5,493		$	517,078
Distributions declared ($0.3018 per share)		—			—		—			(10,741	)		—			(10,741	)
Proceeds from distribution reinvestment plan		244,417			—		5,463			—			—			5,463
Shares repurchased		(140,288	)		—		(2,402	)		—			—			(2,402	)
Unrealized loss on derivatives		—			—		—			—			(4,200	)		(4,200	)
Reclassification adjustment for amounts included in net loss		—			—		—			—			(320	)		(320	)
Cumulative reversal of recognized hedge                                                                                                                                                                                                                                                                                                                                                                                                  ineffectiveness (see Note 2)		—			—		—			134			(134	)		—
Cumulative-effect adjustment recognized upon adoption of ASC 842 (see Note 2)		—			—		—			(24	)		—			(24	)
Equity based compensation		—			—		13			—			—			13
Net loss		—			—		—			(2,953	)		—			(2,953	)
Balance at March 31, 2019		35,447,385		$	35	$	798,483		$	(297,443	)	$	839		$	501,914

For the three months ended March 31, 2018:

	Number of Shares			Common Stock		Additional Paid in Capital			Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Income		Total
Balance at December 31, 2017		35,498,444		$	35	$	798,567		$	(212,883	)	$	5,753	$	591,472
Distributions declared ($0.335 per share)		—			—		—			(11,927	)		—		(11,927	)
Proceeds from distribution reinvestment plan		99,636			—		2,254			—			—		2,254
Shares repurchased		(262,792	)		—		(5,782	)		—			—		(5,782	)
Unrealized gain on derivatives		—			—		—			—			4,826		4,826
Reclassification adjustment for amounts included in    net loss		—			—		—			—			133		133
Equity based compensation		—			—		10			—			—		10
Net loss		—			—		—			(2,240	)		—		(2,240	)
Balance at March 31, 2018		35,335,288		$	35	$	795,049		$	(227,050	)	$	10,712	$	578,746

See accompanying notes to consolidated financial statements.

5

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollar amounts in thousands)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(2,953	)	$	(2,240	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		14,526			14,760
Amortization of debt issuance costs and mortgage premiums, net		150			135
Amortization of acquired market leases, net		(208	)		(128	)
Amortization of equity based compensation		13			11
Amortization of right-of-use-asset		123			—
Straight-line income, net		(421	)		(331	)
Payment of leasing fees		(255	)		(719	)
Adjustment of contingent earnout liability		—			(25	)
Other non-cash adjustments		4			7
Changes in assets and liabilities:
Accounts payable and accrued expenses		1,050			(1,414	)
Accounts and rent receivable		131			925
Due to related parties		2			140
Operating lease liability		78			—
Other liabilities		(1,895	)		301
Other assets		222			420
Net cash flows provided by operating activities		10,567			11,842
Cash flows from investing activities:
Capital expenditures		(805	)		(2,275	)
Investment in unconsolidated joint ventures		—			(1,856	)
Other assets and other liabilities		—			(4,939	)
Net cash flows used in investing activities		(805	)		(9,070	)
Cash flows from financing activities:
Payment of credit facility		—			(8,000	)
Proceeds from credit facility		—			20,000
Payment of mortgages payable		(54	)		(52	)
Proceeds from the distribution reinvestment plan		5,463			2,254
Shares repurchased		(5,463	)		(2,531	)
Distributions paid		(11,924	)		(4,537	)
Payment of deferred investment property acquisition obligations		—			(596	)
Net cash flows (used in) provided by financing activities		(11,978	)		6,538
Net (decrease)  increase in cash, cash equivalents and restricted cash		(2,216	)		9,310
Cash, cash equivalents and restricted cash, at beginning of the period		16,240			16,844
Cash, cash equivalents and restricted cash, at end of period	$	14,024		$	26,154

See accompanying notes to consolidated financial statements.

6

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited, dollar amounts in thousands) 

	Three Months Ended March 31,
	2019		2018
Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,778	$	6,364
Supplemental schedule of non-cash investing and financing activities:
Establishment of operating lease right-of-use asset	$	15,963	$	—
Establishment of operating lease liability	$	23,377	$	—
Accrued SRP	$	2,402	$	5,782
Distributions payable	$	10,741	$	11,927

See accompanying notes to consolidated financial statements.

7

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2019

(Unaudited, dollar amounts in thousands, except per share amounts) 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited consolidated financial statements of Inland Real Estate Income Trust, Inc. (which may be referred to herein as the “Company,” “we,” “us,” or “our”) for the year ended December 31, 2018, which are included in the Company’s 2018 Annual Report on Form 10-K, as certain footnote disclosures contained in such audited consolidated financial statements have been omitted from this Quarterly Report.

NOTE 1 – ORGANIZATION

The Company was formed on August 24, 2011 to acquire and manage a portfolio of commercial real estate investments located in the United States. The Company has primarily focused on acquiring retail properties and intends to target a portfolio of 100% grocery-anchored properties. The Company has invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets if its management believes the expected returns from those investments exceed that of retail properties. The Company also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities.

The Company has no employees. The Company is managed by IREIT Business Manager & Advisor, Inc. (the “Business Manager”), an indirect wholly owned subsidiary of Inland Real Estate Investment Corporation (the “Sponsor”), pursuant to a Business Management Agreement with the Business Manager.

On February 11, 2019, the Company’s board of directors approved a strategic plan (the “Strategic Plan”) with the goals of providing future liquidity to investors and creating long-term stockholder value. The Strategic Plan centers around owning a portfolio of 100% grocery-anchored properties with lower exposure to big box retailers. As part of this strategy, the Company’s management team and board will consider the opportunistic sale of certain assets with the goal of redeploying capital into the acquisition of strategically located grocery-anchored centers, as well as the redevelopment of select centers within the current portfolio. The Company plans to move toward a liquidity event in the next 24 to 36 months, or sooner, market conditions permitting, most likely through a listing on a public securities exchange. In connection with the Strategic Plan, the board approved amendments to the Company’s share repurchase program (as amended, the “SRP”) as further described below in Note 3 – “Equity,” and the Business Management Agreement with the Business Manager was amended and restated on February 11, 2019 to, among other things, eliminate all future acquisition and disposition fees. There can be no assurance that the Strategic Plan will not evolve or change over time or that the Company will be able to successfully implement the Strategic Plan, including listing the Company’s common stock.

On March 11, 2019, as reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on the same date, the Company announced that the Company’s board of directors unanimously approved: (i) an estimated per share net asset value (the “Estimated Per Share NAV”) as of December 31, 2018; (ii) the same per share purchase price for shares issued under the Company’s distribution reinvestment plan (as amended, the “DRP”) beginning with the first quarter distribution payment to stockholders in April 2019 until the Company announces a new Estimated Per Share NAV, and (iii) that, in accordance with the SRP, beginning with repurchases in April 2019 and until the Company announces a new Estimated Per Share NAV, any shares accepted for ordinary repurchases will be repurchased at 80% of the Estimated Per Share NAV and any shares accepted for “exceptional repurchases” will be repurchased at the Estimated Per Share NAV.

At March 31, 2019, the Company owned 59 retail properties, totaling 6,870,124 square feet.  The properties are located in 24 states.  At March 31, 2019, the portfolio had a weighted average physical occupancy of 94.0% and economic occupancy of 94.4%.  

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Disclosures discussing all significant accounting policies are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 20, 2019, under the heading Note 2 – “Summary of Significant Accounting Policies.” There have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2019, except as noted below. 

General

The consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date

8

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation.

Recently Adopted Accounting Pronouncements

In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Among other things, the guidance eliminated the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. As ASU 2017-12 was effective for fiscal years beginning after December 15, 2018, the Company adopted the ASU on January 1, 2019 with a modified retrospective transition. For cash flow hedges existing at January 1, 2019, the Company eliminated the separate measurement of ineffectiveness by means of a cumulative reversal of recognized hedge ineffectiveness with a credit to the opening balance of accumulated distributions and net loss and a debit to accumulated other comprehensive income of $134 on its consolidated balance sheet and consolidated statement of equity.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) which amends the guidance in ASC Topic 840, Leases. The Company adopted the lease standard effective January 1, 2019. As a lessor, the Company’s recognition of rental income remained mainly consistent with previous guidance. As a result of the adoption of ASC 842, the Company includes both billed and accrued charges in its quarterly evaluation of the collectability of a tenant’s receivable balance. Prior to the adoption of ASC 842, uncollectible tenant revenues were recorded as bad debt expense in property operating expenses on our consolidated statement of operations and comprehensive loss. For tenant receivables that the Company determines to be uncollectible, the Company now records an offset for uncollectible tenant revenues directly to rental income. Upon adoption of ASC 842 on January 1, 2019, a cumulative-effect adjustment of $24 was recognized for uncollectible tenant revenues as a result of this change. The standard’s changes related to capitalized initial direct costs did not impact the Company’s accounting for such costs, because historically, the Company capitalized initial direct costs (commissions) that are still considered capitalizable under the new standard.

As part of its adoption of the lease standard, the Company has elected and qualifies to utilize the practical expedient in ASU No. 2018-11, Targeted Improvements, Leases (Topic 842) issued in July 2018, which allows, by class of underlying assets, to not separate non-lease components from the related lease components and, instead, to account for those components as a single lease. This practical expedient for lessors is limited to circumstances in which the non-lease component or components would be accounted for under the new revenue guidance and both (1) the timing and pattern of transfer are the same for the non-lease component(s) and associated lease component and (2) the lease component, if accounted for separately, would be classified as an operating lease.

The Company also elected the package of practical expedients in ASU No. 2018-11, which permitted the Company to adopt the new leases standard under a transition method whereby it initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Therefore, the Company adopted ASU No. 2016-02 on its effective date without restating comparative periods and utilized the practical expedients available in the amendment as part of its adoption. The package of practical expedients included relief from re-assessing a lease using the standard’s new definition of a lease, relief from re-assessing the classification of a lease and allowing previously capitalized initial direct costs (see above) to continue to be amortized. The adoption of the package of practical expedients, as a lessor, did not require the Company to recognize a cumulative effect adjustment.

For lessees, ASU No. 2016-02 establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company is the lessee of a ground lease. The Company has elected the practical expedient that, for leases that commenced before the effective date, the lessee need not reassess whether the contract is a lease nor reassess lease classification for existing leases. The lease liability for the ground lease was based on the present value of the ground lease’s future lease payments using an interest rate which it considers reasonable and within the range of the Company’s incremental borrowing rate. At January 1, 2019, the Company recorded a lease liability of $23,377 and a ROU asset of $15,963 on its consolidated balance sheet. Rental expense for lease payments related to the operating lease will continue to be recognized on a straight-line basis over the lease term.

9

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

Restricted Cash

Amounts included in restricted cash represent those required to be set aside by lenders for real estate taxes, insurance, capital expenditures and tenant improvements on our existing properties. These amounts also include post close escrows for tenant improvements, leasing commissions, master lease, general repairs and maintenance, and are classified as restricted cash on the Company’s consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Company’s consolidated balance sheets to such amounts shown in the Company’s consolidated statements of cash flows:

	March 31,
	2019		2018
Cash and cash equivalents	$	13,023	$	21,506
Restricted cash		1,001		4,648
Total cash, cash equivalents, and restricted cash	$	14,024	$	26,154

Income Tax

During the year ended December 31, 2018, the Company recorded an impairment charge of $15,405 related to its investment in Mainstreet Texas Development Fund, LLC, a joint venture formed to develop three transitional care/rapid recovery centers (“Mainstreet JV”). As a result, the Company will likely recognize either a capital or net operating loss or a combination thereof, for income tax purposes, from this venture in the future. The Company’s investment in Mainstreet JV is held through a taxable REIT subsidiary. Based on an effective tax rate of 28.51%, which is calculated by combining a 21% Federal tax rate and an IL tax rate of 7.51% (9.5% state rate net of the Federal benefit), the deferred tax benefit related to the impairment is approximately $4,400. Since the taxable REIT subsidiary does not currently conduct any activities outside the investment in Mainstreet JV, management does not believe it is more likely than not that the taxable REIT subsidiary will be able to utilize these losses in future tax periods. As a result, management recorded a full valuation allowance of $4,400 to account for this uncertainty.

NOTE 3 – EQUITY

The Company commenced an initial public “best efforts” offering (the “Offering”) on October 18, 2012, which concluded on October 16, 2015. The Company issued 33,534,022 shares of common stock generating gross proceeds of $834,399 from the Offering.  As of March 31, 2019, there were 35,447,385 shares of common stock outstanding including 4,643,680 shares issued through the DRP, net of 2,731,757 shares repurchased through the SRP.    

On March 5, 2019, the Company’s board of directors determined the Estimated Per Share NAV as of December 31, 2018. The previously Estimated Per Share NAV as of December 31, 2017 was established on March 20, 2018.

The Company provides the following programs to facilitate additional investment in the Company’s shares and to provide limited liquidity for stockholders.

Distribution Reinvestment Plan

Through the DRP, the Company provides stockholders with the option to purchase additional shares from the Company by automatically reinvesting cash distributions, subject to certain share ownership restrictions. The Company does not pay any selling commissions or a marketing contribution and due diligence expense allowance in connection with the DRP. Pursuant to the DRP, the price per share for shares of common stock purchased under the DRP is equal to the estimated value of a share, as determined by the Company’s board of directors and reported by the Company from time to time, until the shares become listed for trading, if a listing occurs, assuming that the DRP has not been terminated or suspended in connection with such listing.

Distributions reinvested through the DRP were $5,463 and $2,254 for the three months ended March 31, 2019 and 2018, respectively.

10

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

Share Repurchase Program

The Company adopted the SRP effective October 18, 2012, under which the Company is authorized to purchase shares from stockholders who purchased their shares from the Company or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested, if the Company chooses to purchase them. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, the one year holding period does not apply. The SRP was amended and restated effective January 1, 2018 to change the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions. On February 11, 2019, the Company’s board of directors adopted a second amended and restated SRP (the “A&R SRP”), effective March 21, 2019. Under the A&R SRP, the Company is authorized to make ordinary repurchases at a price equal to 80.0% of the “share price,” which is defined in the A&R SRP as an amount equal to the lesser of: (A) $25, as adjusted under certain circumstances, including, among other things, if the applicable shares were purchased from the Company at a discounted price; or (B) the most recently disclosed estimated value per share. Prior to the amendment, the Company was authorized to make ordinary repurchases at a price ranging from 92.5% to 100% of the “share price.” The Company may repurchase shares upon a stockholder’s death or qualifying disability at a price equal to 100% of the “share price.”

The A&R SRP provides the Company’s board of directors with the discretion to reduce the funding limit for share repurchases.  Prior to the amendment, the funding for ordinary repurchases was limited to the proceeds from the DRP during a particular quarter.  The A&R SRP limits the dollar amount for any repurchases made by the Company each calendar quarter to an amount equal to a percentage determined in the sole discretion of the board on a quarterly basis that will not be less than 50% of the net proceeds from the DRP during the applicable quarter.  The Company continues to limit the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted for any stock splits or other combinations.

If either or both of the repurchase limitations prevent the Company from repurchasing all of the shares offered for repurchase during a calendar quarter, the Company will repurchase shares, on a pro rata basis within each category below, in accordance with the repurchase limitations in the following order: (a) first, all repurchases sought upon a stockholder’s death or qualifying disability and (b) second, all ordinary repurchases. The SRP will immediately terminate if the Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP.

Repurchases through the SRP were $2,402 and $5,782 for the three months ended March 31, 2019 and 2018, respectively. At March 31, 2019 and December 31, 2018, the Company’s liability related to the SRP was $2,402 and $5,463, respectively, recorded in other liabilities on the Company’s consolidated balance sheets.

NOTE 4 – LEASES

The Company is lessor to over 700 retail operating leases. The remaining lease terms for the Company’s leases range from less than one year to 19 years. The Company considers the date on which it makes a leased space available to a lessee as the commencement date of the lease. At commencement, the Company determines the lease classification utilizing the classification tests under ASC 842. Options to extend a lease are included in the lease term when it is reasonably certain that the tenant will exercise its option to extend. Termination penalties are included in income when there is a termination agreement, all the conditions of the agreement have been met and amounts due are considered collectible. Such termination fees are recognized on a straight-line basis over the remaining lease term in rental income. If an operating lease is modified and the modification is not accounted for as a separate contract, the Company accounts for the modification as if it were a termination of the existing lease and the creation of a new lease.  The Company considers any prepaid or accrued rentals relating to the original lease as part of the lease payments for the modified lease. The Company includes options to modify the original lease term when it is reasonably certain that the tenant will exercise its option to extend.

Lease Income

Most of the revenue from the Company’s properties consists of rents received under long-term operating leases. Most leases require the tenant to pay fixed base rent paid monthly in advance, and to reimburse the Company for the tenant’s pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the Company and recoverable under the terms of the lease. Under these leases, the Company pays all expenses and is reimbursed by the tenant for the tenant’s pro rata share of recoverable expenses paid.

11

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the consolidated statements of operations and comprehensive loss. Under leases where all expenses are paid by the Company, subject to reimbursement by the tenant, the expenses are included within property operating expenses. As of January 1, 2019, the date on which the Company adopted the new leasing standard, reimbursements for common area maintenance are considered non-lease components that are permitted to be combined with rental income. The combined lease component and reimbursements for insurance and taxes are reported as rental income on the consolidated statement of operations and comprehensive loss.  

Rental income related to the Company's operating leases is comprised of the following:

	Three Months Ended March 31, 2019
Rental income - fixed payments	$	25,495
Rental income - variable payments (a)		6,719
Amortization of acquired market leases, net	208
Rental income	$	32,422

(a) Primarily includes tenant recovery income for real estate taxes, common area maintenance and insurance.

The future base rent payments to be received under operating leases including ground leases as of March 31, 2019 for the years indicated, assuming no expiring leases are renewed, are as follows:

	Lease Payments
2019 (remainder of year)	$	69,772
2020		87,211
2021		81,620
2022		71,831
2023		60,319
Thereafter		196,840
Total	$	567,593

Lease Expense

The Company is the lessee of one ground lease.  The ground lease, which commenced on July 1, 2007, was assumed as part of a property purchase in October 2015 and extends through June 30, 2037 with six 5-year renewal options which the Company assumes will be exercised. At commencement of the lease, the Company considered the lease terms and lease classification. As reassessment is not required under practical expedients accorded in ASC 842, the Company will continue to account for the ground lease as an operating lease with an established lease term and payment schedule. At January 1, 2019, the Company recorded a lease liability of $23,377 and a ROU asset of $15,963 on its consolidated balance sheet. The lease liability was based on the present value of the ground lease’s future lease payments using an interest rate of 6.32% which the Company considers reasonable and within the range of the Company’s incremental borrowing rate.

Lease payments for the ground lease as of March 31, 2019 for each of the five succeeding years and thereafter is as follows:  

12

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

	Lease Payments
2019 (remainder of year)	$	855
2020		1,140
2021		1,140
2022		1,202
2023		1,264
Thereafter		88,376
Total	$	93,977

NOTE 5 – ACQUIRED INTANGIBLE ASSETS AND LIABILITIES

The following table summarizes the Company’s identified intangible assets and liabilities as of March 31, 2019 and December 31, 2018: 

	March 31, 2019			December 31, 2018
Intangible assets:
Acquired in-place lease value	$	165,182		$	165,182
Acquired above market lease value		45,824			45,824
Accumulated amortization		(101,394	)		(95,649	)
Acquired lease intangibles, net	$	109,612		$	115,357
Intangible liabilities:
Acquired below market lease value	$	71,551		$	71,551
Acquired above market ground lease		—			5,169
Accumulated amortization		(20,066	)		(19,258	)
Acquired below market lease intangibles, net	$	51,485		$	57,462

As of March 31, 2019, the weighted average amortization periods for acquired in-place lease, above market lease intangibles and below market lease intangibles are 10, 14, and 19 years, respectively.

The portion of the purchase price allocated to acquired above market lease value and acquired below market lease value is amortized on a straight-line basis over the term of the related lease as an adjustment to rental income. For below market lease values, the amortization period includes any renewal periods with fixed rate renewals. Prior to January 1, 2019, the acquired above market ground lease was amortized on a straight-line basis as an adjustment to property operating expense over the term of the lease and included renewal periods. At date of the adoption of ASC 842 on January 1, 2019, the remaining balance of the intangible related to the above market ground lease was derecognized as a cumulative-effect adjustment to establish the operating lease ROU asset.  The portion of the purchase price allocated to acquired in-place lease value is amortized on a straight-line basis over the acquired leases’ weighted average remaining term.

Amortization pertaining to acquired in-place lease value, above market ground lease, above market lease value and below market lease value is summarized below:

	Three Months Ended March 31,
Amortization recorded as amortization expense:	2019			2018
Acquired in-place lease value	$	4,841		$	5,071
Amortization recorded as a reduction to property operating expense:
Acquired above market ground lease	$	—		$	23
Amortization recorded as a (reduction) increase to rental income:
Acquired above market leases	$	(904	)	$	(1,030	)
Acquired below market leases		1,112			1,135
Net rental income increase	$	208		$	105

13

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

Estimated amortization of the respective intangible lease assets and liabilities as of March 31, 2019 for each of the five succeeding years and thereafter is as follows:  

	Acquired In-Place Leases		Above Market Leases		Below Market Leases
2019 (remainder of year)	$	12,420	$	2,526	$	3,208
2020		13,801		3,057		4,070
2021		11,354		2,988		3,889
2022		8,714		2,684		3,630
2023		7,458		2,489		3,347
Thereafter		26,301		15,820		33,341
Total	$	80,048	$	29,564	$	51,485

NOTE 6 – DEBT AND DERIVATIVE INSTRUMENTS

As of March 31, 2019 and December 31, 2018, the Company had the following mortgages and credit facility payable:

	March 31, 2019						December 31, 2018
Type of Debt	Principal Amount			Weighted Average Interest Rate			Principal Amount			Weighted Average Interest Rate
Fixed rate mortgages payable	$	171,592			4.25	%	$	171,646			4.25	%
Variable rate mortgages payable with swap agreements		252,244			3.33	%		252,244			3.33	%
Variable rate mortgages payable		684			4.09	%		684			3.95	%
Mortgages payable	$	424,520			3.71	%	$	424,574			3.71	%
Credit facility payable		284,523			4.22	%		284,523			4.22	%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$	709,043			3.91	%	$	709,097			3.91	%
Add: Unamortized mortgage premiums		1,525						1,683
Less: Unamortized debt issuance costs		(4,588	)					(4,896	)
Total debt	$	705,980					$	705,884

The Company estimates the fair value of its total debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by the Company’s lenders using Level 3 inputs.  The carrying value of the Company’s debt excluding mortgage premium and unamortized debt issuance costs was $709,043 and $709,097 as of March 31, 2019 and December 31, 2018, respectively, and its estimated fair value was $711,066 and $709,737 as of March 31, 2019 and December 31, 2018, respectively.

14

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

As of March 31, 2019, scheduled principal payments and maturities on the Company’s debt were as follows:

	March 31, 2019
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgage Loans		Maturity of Credit Facility		Total
2019 (remainder of the year)	$	178	$	7,447	$	—	$	7,625
2020		897		—		—		897
2021		1,531		82,740		—		84,271
2022		615		101,537		134,523		236,675
2023		326		91,230		150,000		241,556
Thereafter		636		137,383		—		138,019
Total	$	4,183	$	420,337	$	284,523	$	709,043

Credit Facility Payable

The Company’s credit facility (the “Credit Facility”) consisting of a $200,000 revolving credit facility (the “Revolving Credit Facility”) and a $150,000 term loan (the “Term Loan”) has an accordion feature that allows for an increase in available borrowings up to $700,000, subject to certain conditions.

At March 31, 2019, the Company has $134,523 outstanding under the Revolving Credit Facility and $150,000 outstanding under the Term Loan.  At March 31, 2019 the interest rate on the Revolving Credit Facility and the Term Loan was 4.14% and 4.29%, respectively. The Revolving Credit Facility matures on August 1, 2022, and the Company has the option to extend the maturity date for one additional year subject to the payment of an extension fee and certain other conditions.  The Term Loan matures on August 1, 2023. As of March 31, 2019 the Company had $65,477 available for borrowing under the Revolving Credit Facility.

The Company’s performance of the obligations under the Credit Facility, including the payment of any outstanding indebtedness under the Credit Facility, is guaranteed by certain subsidiaries of the Company, including each of the subsidiaries of the Company which owns or leases any of the properties included in the pool of unencumbered properties comprising the borrowing base.  Additional properties will be added to and removed from the pool from time to time to support amounts borrowed under the Credit Facility. At March 31, 2019, there were 28 properties included in the pool of unencumbered properties.

The Credit Facility requires compliance with certain covenants, including a minimum tangible net worth requirement, a distribution limitation, restrictions on indebtedness and investment restrictions, as defined. It also contains customary default provisions including the failure to comply with the Company's covenants and the failure to pay when amounts outstanding under the Credit Facility become due.  The Company is in compliance with all financial covenants related to the Credit Facility.

Mortgages Payable

The mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. As of March 31, 2019, the Company was current on all of the payments and in compliance with all financial covenants. All of the Company’s mortgage loans are secured by first mortgages on the respective real estate assets. As of March 31, 2019, the weighted average years to maturity for the Company’s mortgages payable was 4.3 years.  

Interest Rate Swap Agreements

The Company entered into interest rate swaps to fix certain of its floating LIBOR based debt under variable rate loans to a fixed rate to manage its risk exposure to interest rate fluctuations. The Company will generally match the maturity of the underlying variable rate debt with the maturity date on the interest swap. See Note 14 - "Fair Value Measurements" for further information.

15

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

The following table summarizes the Company’s interest rate swap contracts outstanding as of March 31, 2019.

Date Entered	Effective Date	Maturity Date	Pay Fixed Rate (a)			Notional Amount		Fair Value at March 31, 2019
Assets
February 11, 2015	March 2, 2015	March 1, 2022		2.02	%		6,114		26
April 7, 2015	April 7, 2015	April 7, 2022		1.74	%		49,400		608
September 17, 2015	September 17, 2015	September 17, 2022		1.90	%		13,700		118
October 2, 2015	November 1, 2015	November 1, 2022		1.79	%		13,100		163
January 25, 2016	February 1, 2016	February 1, 2021		1.40	%		38,000		586
June 7, 2016	July 1, 2016	July 1, 2023		1.42	%		43,680		1,285
July 21, 2016	August 1, 2016	August 1, 2023		1.30	%		47,550		1,676
June 5, 2017	May 31, 2017	May 15, 2022		1.90	%		14,700		115
						$	226,244	$	4,577
Liabilities
December 23, 2015	December 23, 2015	January 2, 2026		2.30	%		26,000		(175	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		60,000		(1,423	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(593	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(598	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		40,000		(949	)
						$	176,000	$	(3,738	)

(a)   Receive floating rate index based upon 1 month LIBOR. At March 31, 2019, the 1 month LIBOR was 2.49%.

On January 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities which eliminated the requirement to separately measure and report hedge ineffectiveness. For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness should be recorded in other comprehensive income (OCI). When the amounts recorded in OCI are reclassified to earnings, they should be presented in the same income statement line item as the effect of the hedged item. The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2019 and 2018.

	Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships	2019			2018
Effective portion of derivatives	$	(4,200	)	$	4,826
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$	(454	)	$	133
Ineffective portion of derivatives	$	—		$	(7	)

The total amount of interest expense presented on the consolidated statements of comprehensive (loss) income was $7,153 and $6,467, for the three months ended March 31, 2019 and 2018, respectively. The location of the net gain or loss reclassified into income from accumulated other comprehensive income is reported in interest expense on the consolidated statements of comprehensive (loss) income.   The amount that is expected to be reclassified from accumulated other comprehensive income into income in the next twelve months is $(1,371).

16

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

NOTE 7 – DISTRIBUTIONS

On March 19, 2019, the Company’s board of directors declared cash distributions payable to stockholders of record as of the close of business on March 31, 2019 in an amount equal to $0.3018 per share, which represents an annualized rate of 6% based on the Estimated Per Share NAV as of December 31, 2018, payable in arrears the following quarter. In 2018, the Company paid quarterly distributions in the amount of $0.335 per share, payable in arrears the following quarter.

The table below presents the distributions paid and declared during the three months ended March 31, 2019 and 2018.

	Three Months Ended March 31,
	2019		2018
Distributions paid	$	11,924	$	4,537
Distributions declared	$	10,741	$	11,927

NOTE 8 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the “common shares”). Diluted EPS is computed by dividing net income (loss) by the common shares plus common share equivalents. The Company excludes antidilutive restricted shares and units from the calculation of weighted-average shares for diluted EPS.  As a result of a net loss in the three months ended March 31, 2019 and 2018, 2,573 shares and 1,743 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive.  

NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company may be subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of the Company.

NOTE 10 – EQUITY-BASED COMPENSATION

Under the Company’s Employee and Director Restricted Share Plan (“RSP”), restricted shares and restricted share units generally vest over a one to three year vesting period from the date of the grant, subject to the specific terms of the grant. In accordance with the RSP, restricted shares and restricted share units were issued to non-employee directors as compensation. Each restricted share and restricted share unit entitles the holder to receive one common share when it vests. Restricted shares and restricted share units are included in common stock outstanding on the date of vesting. The grant-date value of the restricted shares and restricted share units is amortized over the vesting period representing the requisite service period. Compensation expense associated with the restricted shares and restricted share units issued to the non-employee directors was $13 and $11, in the aggregate, for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, the Company had $36 of unrecognized compensation expense related to the unvested restricted shares and restricted share units, in the aggregate. The weighted average remaining period that compensation expense related to unvested restricted shares and restricted share units will be recognized is 1.4 years.

A summary table of the status of the restricted shares and restricted share units is presented below:

	Restricted Shares		Restricted Share Units			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2018		3,224		1,201		$	100	$	100
Granted		—		25			1		—
Vested		—		(5	)		—		—
Converted		—		—			—		—
Forfeited		—		—			—		—
Outstanding at March 31, 2019		3,224		1,221		$	101	$	100

17

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

NOTE 11 – SEGMENT REPORTING

The Company has one reportable segment as defined by U.S. GAAP, retail real estate, for the three months ended March 31, 2019 and 2018.

NOTE 12 – TRANSACTIONS WITH RELATED PARTIES

The following table summarizes the Company’s related party transactions for the three months ended March 31, 2019 and 2018. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts.

		Three Months Ended March 31,				Unpaid amounts as of
		2019		2018		March 31, 2019		December 31, 2018
General and administrative reimbursements	(a)	$	338	$	381	$	230	$	216
Acquisition fees	(b)	$	—		9		—		—
Real estate management fees		$	1,086	$	1,285	$	—	$	—
Property operating expenses			284		284		—		—
Construction management fees			49		22		54		6
Leasing fees			89		85		98		37
Total real estate management related costs	(c)	$	1,508	$	1,676	$	152	$	43
Business management fees	(d)	$	2,333	$	2,328	$	2,333	$	2,345

(a) The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses incurred by the Business Manager or its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

(b) Prior to February 11, 2019, the Company was required to pay the Business Manager or its affiliates a fee equal to 1.5% of the “contract purchase price,” as defined, of each asset acquired. The business management agreement was amended and restated to, among other things, remove the obligation to pay acquisition fees and disposition fees payable to the Business Manager by the Company with respect to transactions occurring on or after February 11, 2019. The Business Manager and its related parties continue to be reimbursed for acquisition and transaction related costs of the Business Manager and its related parties relating to the Company’s acquisition activities, regardless of whether the Company acquires the real estate assets. There were no related party acquisition costs or fees incurred during the three months ended March 31, 2019. Related party acquisition costs and fees incurred during the three months ended March 31, 2018 are included in acquisition related costs in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.  

(c) For each property that is managed by Inland Commercial Real Estate Services LLC (the “Real Estate Manager”) (and its predecessor), the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. The Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by the Real Estate Manager or its affiliates, the Company pays the Real Estate Manager a separate leasing fee. Further, in the event that the Company engages its Real Estate Manager to provide construction management services for a property, the Company pays a separate construction management fee.  Leasing fees are included in deferred costs, net and construction management fees are included in building and other improvements in the consolidated balance sheets. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Manager and its affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer

18

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

of the Real Estate Manager or the Company.  Real estate management fees and reimbursable expenses are included in property operating expenses in the consolidated statements of operations and comprehensive (loss) income.

(d) The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets.” The fee is payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter.  

NOTE 13 – FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

Level 1 −	Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2 −	Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 −	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes.

Recurring Fair Value Measurements

For assets and liabilities measured at fair value on a recurring basis, the table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of March 31, 2019 and December 31, 2018, respectively.

	Fair Value
	Level 1		Level 2			Level 3		Total
March 31, 2019
Interest rate swap agreements - Other assets	$	—	$	4,577		$	—	$	4,577
Interest rate swap agreements - Other liabilities	$	—	$	(3,738	)	$	—	$	(3,738	)
December 31, 2018
Interest rate swap agreements - Other assets	$	—	$	7,286		$	—	$	7,286
Interest rate swap agreements - Other liabilities	$	—	$	(1,926	)	$	—	$	(1,926	)

The fair value of derivative instruments was estimated based on data observed in the forward yield curve which is widely observed in the marketplace. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty's nonperformance risk in the fair value measurements which utilize Level 3 inputs, such as estimates of current credit spreads. The Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative interest rate swap agreements and therefore has classified these in Level 2 of the hierarchy.

19

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited, dollar amounts in thousands, except per share amounts)

NOTE 14 – SUBSEQUENT EVENTS

The Company paid distributions of $10,741 and issued 240,331 shares through the DRP on April 1, 2019.

20

Item 2.  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, 2018, as filed with the Securities and Exchange Commission on March 20, 2019, and factors described below:

• Market disruptions may adversely impact many aspects of our operating results and operating condition;

• We have incurred net losses on a U.S. generally accepted accounting principles (“U.S. GAAP”) basis for the three months ended March 31, 2019 and 2018 and for the year ended December 31, 2018;

• There is no established public trading market for our shares, our stockholders may not be able to sell their shares under our share repurchase program (as amended, “SRP”) and, if our stockholders are able to sell their shares under the SRP, or otherwise, they may not be able to recover the amount of their investment in our shares;

• There is no assurance our board of directors will pursue a listing or other liquidity event at any time in the future;

• Our charter generally limits the total amount we may borrow to 300% of our net assets, equivalent to 75% of the costs of our assets;

• Inland Real Estate Investment Corporation (our “Sponsor”) may face a conflict of interest in allocating personnel and resources between its affiliates, our Business Manager (as defined below) and Inland Commercial Real Estate Services LLC, referred to herein as 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 Business Manager and its affiliates face conflicts of interest caused by their compensation arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders;

• 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;

• If we fail to continue to qualify as a REIT, our operations and distributions to stockholders will be adversely affected; and

• We may not be able to successfully implement the strategic plan adopted by our board of directors on February 11, 2019, which is described further below.

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.

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The following discussion and analysis relates to the three months ended March 31, 2019 and 2018 and as of March 31, 2019 and December 31, 2018. You should read the following discussion and analysis along with our consolidated financial statements and the related notes included in this report.

Overview

We were formed as a Maryland corporation on August 24, 2011 and 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 year ended December 31, 2013. We have no employees. We are managed by our business manager, IREIT Business Manager & Advisor, Inc., referred to herein as our “Business Manager.”

We have primarily focused on acquiring retail properties and intend to target a portfolio of 100% grocery-anchored properties as described below. We have invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets if management believes the expected returns from those investments exceed that of retail properties. We also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities.

At March 31, 2019, we had total assets of $1.3 billion and owned 59 properties located in 24 states containing 6.9 million square feet.  A majority of our properties are multi-tenant, necessity-based retail shopping centers primarily located in major regional markets and growing secondary markets throughout the United States. As of March 31, 2019, approximately 80% of our annualized base rental income is generated from grocery anchored or grocery shadow anchored shopping centers.  The portfolio properties have staggered lease maturity dates and anchor tenants generally with strong credit ratings.

We commenced our “best efforts” offering (the “Offering”) on October 18, 2012, which concluded on October 16, 2015.  We sold 33,534,022 shares of common stock generating gross proceeds of $834.4 million from the Offering.  On March 5, 2019, our board of directors determined an estimated per share net asset value of our common stock of $20.12.  

On January 16, 2018, we effected a 1-for-2.5 reverse stock split whereby every 2.5 shares of our issued and outstanding common stock were converted into one share of our common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the number of our outstanding shares was reduced from 88,746,109 to 35,498,444. In accordance with U.S. GAAP, all share information presented has been retroactively adjusted to reflect the Reverse Stock Split.

Company Highlights - Three Months Ended March 31, 2019

On February 11, 2019, our board of directors approved a strategic plan with the goal of providing a liquidity event in the next 24 to 36 months, or sooner, market conditions permitting, most likely through a listing on a public securities exchange. The strategic plan centers around owning a portfolio of 100% grocery-anchored properties with lower exposure to big box retailers. As part of this strategy, our management team and our board of directors will consider the opportunistic sale of certain assets with the goal of redeploying capital into the acquisition of strategically located grocery-anchored centers, as well as the redevelopment of select centers within the current portfolio. In connection with the strategic plan, our board approved amendments to the SRP as further described below under Part II, Item 2 “–Share Repurchase Program,” and the business management agreement with the Business Manager was amended and restated on February 11, 2019 to, among other things, eliminate all future acquisition and disposition fees. There can be no assurance that the strategic plan will not evolve or change over time or that we will be able to successfully implement the strategic plan, including listing our common stock.

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

Investment Properties

	As of March 31, 2019
Number of properties	59
Purchase price	$	1,414,253
Total square footage		6,870,124
Weighted average physical occupancy		94.0	%
Weighted average economic occupancy		94.4	%
Weighted average remaining lease term (years)		5.8

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The table below presents information for each of our investment properties as of March 31, 2019.

Property	Location	Square Footage		Physical Occupancy			Economic Occupancy			Mortgage Balance		Interest Rate (b)
Dollar General (12 properties)	Various		111,890		100.0	%		100.0	%	$	7,447		4.33	%
Newington Fair (a)	Newington, CT		186,205		100.0	%		100.0	%		—		—
Wedgewood Commons (a)	Olive Branch, MS		159,258		98.1	%		98.1	%		—		—
Park Avenue (a)	Little Rock, AR		79,131		59.7	%		82.8	%		—		—
North Hills Square (a)	Coral Springs, FL		63,829		100.0	%		100.0	%		—		—
Mansfield Shopping Center (a)	Mansfield, TX		148,529		69.1	%		69.2	%		—		—
Lakeside Crossing (a)	Lynchburg, VA		67,034		100.0	%		100.0	%		—		—
MidTowne Shopping Center (a)	Little Rock, AR		126,288		88.6	%		88.6	%		—		—
Dogwood Festival (a)	Flowood, MS		187,610		92.0	%		92.0	%		—		—
Pick N Save Center (a)	West Bend, WI		94,000		91.9	%		91.9	%		—		—
Harris Plaza (a)	Layton, UT		125,965		84.7	%		84.7	%		—		—
Dixie Valley	Louisville, KY		119,981		90.3	%		91.8	%		6,798		3.67	%
The Landings at Ocean Isle (a)	Ocean Isle, NC		53,203		94.6	%		94.6	%		—		—
Shoppes at Prairie Ridge (a)	Pleasant Prairie, WI		232,606		94.3	%		94.3	%		—		—
Harvest Square	Harvest, AL		70,590		94.1	%		94.1	%		6,570		4.65	%
Heritage Square	Conyers, GA		22,385		100.0	%		100.0	%		4,460		5.10	%
The Shoppes at Branson Hills (a)	Branson, MO		256,329		83.1	%		83.1	%		—		—
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		94.9	%		94.9	%		—		—
Shoppes at Lake Park (a)	W. Valley City, UT		52,997		93.2	%		93.2	%		—		—
Plaza at Prairie Ridge (a)	Pleasant Prairie,WI		9,035		100.0	%		100.0	%		—		—
Green Tree Shopping Center	Katy, TX		147,621		96.4	%		96.4	%		13,100		3.24	%
Eastside Junction	Athens, AL		79,700		87.7	%		87.7	%		6,100		4.60	%
Fairgrounds Crossing	Hot Springs, AR		155,127		95.7	%		95.7	%		13,453		5.21	%
Prattville Town Center	Prattville, AL		168,842		100.0	%		100.0	%		15,930		5.48	%
Regal Court	Shreveport, LA		363,061		96.1	%		96.1	%		26,000		4.50	%
Shops at Hawk Ridge (a)	St. Louis, MO		75,951		100.0	%		100.0	%		—		—
Walgreens Plaza	Jacksonville, NC		42,219		71.4	%		83.5	%		4,650		5.30	%
Whispering Ridge (a)	Omaha, NE		69,676		71.8	%		71.8	%		—		—
Frisco Marketplace (a)	Frisco, TX		112,024		94.9	%		94.9	%		—		—
White City	Shrewsbury, MA		257,121		93.4	%		94.7	%		49,400		3.24	%
Treasure Valley (a)	Nampa, ID		133,292		100.0	%		100.0	%		—		—
Yorkville Marketplace (a)	Yorkville, IL		111,591		91.3	%		91.3	%		—		—
Shoppes at Market Pointe	Papillion, NE		253,903		98.2	%		98.2	%		13,700		3.30	%
2727 Iowa Street (a)	Lawrence, KS		85,044		100.0	%		100.0	%		—		—
Settlers Ridge	Pittsburgh, PA		473,821		99.1	%		99.1	%		76,532		3.70	%
Milford Marketplace	Milford, CT		111,720		96.1	%		96.1	%		18,727		4.02	%
Marketplace at El Paseo	Fresno, CA		224,683		96.6	%		97.4	%		38,000		2.95	%
Blossom Valley Plaza (a)	Turlock, CA		111,435		96.1	%		96.1	%		—		—
The Village at Burlington Creek	Kansas City, MO		158,049		78.1	%		78.1	%		17,723		4.25	%
Oquirrh Mountain Marketplace (a)	South Jordan, UT		75,950		100.0	%		100.0	%		—		—
Marketplace at Tech Center	Newport News, VA		210,297		95.5	%		95.5	%		47,550		3.15	%
Coastal North Town Center	Myrtle Beach, SC		304,662		95.1	%		95.1	%		43,680		3.17	%
Oquirrh Mountain Marketplace II (a)	South Jordan, UT		10,150		100.0	%		100.0	%		—		—
Wilson Marketplace (a)	Wilson, NC		311,030		99.1	%		99.1	%		—		—
Pentucket Shopping Center	Plaistow, NH		198,469		98.0	%		98.0	%		14,700		3.65	%
Coastal North Town Center - Phase II	Myrtle Beach, SC		6,588		100.0	%		100.0	%		—		—
Portfolio total			6,870,124		94.0	%		94.4	%	$	424,520		3.71	%

(a) Property is included in the pool of unencumbered properties under our Credit Facility.

(b) Portfolio total is equal to the weighted average interest rate.

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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 March 31, 2019.

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		4	$	3,374		3.5	%	$	13.52		249,493		3.6	%
Dicks Sporting Goods, Inc		6		3,269		3.4	%		11.84		276,038		4.0	%
TJ Maxx/HomeGoods/Marshalls		13		3,194		3.3	%		9.70		329,253		4.8	%
Petsmart		10		2,871		3.0	%		14.79		194,077		2.8	%
Ross Dress for Less, Inc		10		2,633		2.7	%		10.15		259,487		3.8	%
Albertsons/Jewel/Shaws		2		2,304		2.4	%		18.02		127,892		1.9	%
Ulta Salon, Cosmetics & Fragrance		10		2,261		2.3	%		21.69		104,276		1.5	%
Kohl's Department Stores		4		1,888		1.9	%		5.68		332,461		4.8	%
LA Fitness (Fitness International)		2		1,810		1.9	%		20.20		89,600		1.3	%
Giant Eagle		1		1,805		1.9	%		13.96		129,340		1.9	%
Top ten tenants		62	$	25,409		26.1	%	$	12.15		2,091,917		30.4	%

The following table sets forth a summary of our tenant diversity for our entire portfolio and is based on leases in-place at March 31, 2019.

Tenant Type	GrossLeasable Area – Square Footage		Percent of Total Gross Leasable Area			Percent of Total Annualized Base Rent
Discount and Department Stores		1,563,926		24.1	%		12.3	%
Grocery		950,042		14.6	%		13.9	%
Home Goods		940,782		14.5	%		8.5	%
Lifestyle, Health Clubs, Books & Phones		828,853		12.8	%		15.6	%
Restaurant		543,836		8.4	%		16.1	%
Apparel & Accessories		455,196		7.0	%		10.4	%
Sporting Goods		333,719		5.1	%		4.7	%
Pet Supplies		288,642		4.4	%		4.6	%
Consumer Services, Salons, Cleaners, Banks		279,588		4.3	%		7.5	%
Health, Doctors & Health Foods		159,574		2.5	%		4.5	%
Other		142,237		2.3	%		1.9	%
Total		6,486,395		100.0	%		100.0	%

The following table sets forth a summary, as of March 31, 2019, 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		52	%		6.8
Junior Box	5,000-9,999		15	%		5.6
Small Shop	Less than 5,000		33	%		4.3
Total			100	%		5.8

Lease Expirations

The following table sets forth a summary, as of March 31, 2019, of lease expirations scheduled to occur during the remainder of 2019 and each of the calendar years from 2020 to 2028 and thereafter, assuming no exercise of renewal options or early termination rights

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for leases commenced on or prior to March 31, 2019. Annualized base rent represents the rent in-place of the applicable property at March 31, 2019. The table below includes ground leases. If ground leases are excluded, annualized base rent would equal $87,566, or $17.36 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
2019 (including month-to-month)		48		183,374		2.8	%	$	3,181		3.3	%	$	17.35
2020		100		540,901		8.3	%		8,987		9.3	%		16.61
2021		92		365,911		5.6	%		7,395		7.6	%		20.21
2022		92		577,556		8.9	%		10,873		11.2	%		18.83
2023		111		825,821		12.7	%		12,648		13.0	%		15.32
2024		87		763,727		11.8	%		13,300		13.7	%		17.41
2025		71		627,034		9.7	%		11,261		11.6	%		17.96
2026		40		446,827		6.9	%		6,140		6.3	%		13.74
2027		35		376,558		5.8	%		4,642		4.8	%		12.33
2028		31		685,819		10.6	%		6,252		6.4	%		9.12
Thereafter		34		1,092,867		16.8	%		12,526		12.9	%		11.46
Leased Total		741		6,486,395		100.0	%	$	97,205		100.0	%	$	14.99

LIQUIDITY AND CAPITAL RESOURCES

General

Our primary uses and sources of cash are as follows:

Uses		Sources
Short-term liquidity and capital needs such as:		•	Cash receipts from our tenants
•	Interest & principal payments on mortgage loans and Credit Facility	•	Sale of shares through the DRP
•	Property operating expenses	•	Proceeds from new or refinanced mortgage loans
•	General and administrative expenses	•	Borrowing on our Credit Facility
•	Distributions to stockholders	•	Proceeds from sales of real estate
•	Fees payable to our Business Manager and Real Estate Manager
•	Repurchases of shares under the SRP
Long-term liquidity and capital needs such as:
•	Acquisitions of real estate directly or through joint ventures
•	Interest & principal payments on mortgage loans and Credit Facility
•	Capital expenditures, tenant improvements and leasing commissions
•	Repurchases of shares under the SRP

At March 31, 2019, we had $134.5 million outstanding under the Revolving Credit Facility and $150.0 million outstanding under the Term Loan.  At March 31, 2019 the interest rate on the Revolving Credit Facility and the Term Loan was 4.14% and 4.29%, respectively. The Revolving Credit Facility matures on August 1, 2022, and we have the option to extend the maturity date for one additional year subject to the payment of an extension fee and certain other conditions.  The Term Loan matures on August 1, 2023. As of March 31, 2019, we had $65.5 million available for borrowing under the Revolving Credit Facility.

As of March 31, 2019, we had total debt outstanding of $709.0 million, excluding mortgage premiums and unamortized debt issuance costs, which bore interest at a weighted average interest rate of 3.91% per annum.  As of March 31, 2019, the weighted average years to maturity for our debt was 4.2 years. As of March 31, 2019 and December 31, 2018, our borrowings were 50% and 50%,

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respectively, of the purchase price of our investment properties. At March 31, 2019 our cash and cash equivalents balance is $13.0 million.

We anticipate using our Credit Facility to pay-off two secured mortgage loans totaling a principal amount of $7.4 million maturing at the end of 2019. The average interest rate of the loans is 4.33%.

For information related to our debt maturities reference is made to Note 6 – “Debt and Derivative Instruments” which is included in our March 31, 2019 Notes to Consolidated Financial Statements in Item 1.

Cash Flow Analysis

	Three Months Ended March 31,						Change
	2019			2018			2019 vs. 2018
	(Dollar amounts in thousands)
Net cash flows provided by operating activities	$	10,567		$	11,842		$	(1,275	)
Net cash flows used in investing activities	$	(805	)	$	(9,070	)	$	8,265
Net cash flows (used in) provided by financing activities	$	(11,978	)	$	6,538		$	(18,516	)

Operating activities

The decrease in cash from operating activities during the three months ended March 31, 2019 compared to the three months ended March 31, 2018 was primarily due to the timing of real estate tax payments, an increase in interest expense payments and a decrease in prepaid rent.

Investing activities

	Three Months Ended March 31,						Change
	2019			2018			2019 vs. 2018
	(Dollar amounts in thousands)
Capital expenditures		(805	)		(2,275	)		1,470
Investment in unconsolidated joint ventures		—			(1,856	)		1,856
Other assets and restricted escrows		—			(4,939	)		4,939
Net cash used in investing activities	$	(805	)	$	(9,070	)	$	8,265

We used less cash in our investing activities in the three months ended March 31, 2019 compared to the three months ended March 31, 2018. The decrease in cash used in investing activities is primarily due a reduction in funding our joint venture and related note receivable for which an impairment charge was recognized at the end of 2018 and a decrease in capital expenditures.

Financing activities

	Three Months Ended March 31,						Change
	2019			2018			2019 vs. 2018
	(Dollar amounts in thousands)
Total changes related to debt	$	(54	)	$	11,948		$	(12,002	)
Proceeds from the distribution reinvestment plan, net of shares repurchased		—			(277	)		277
Distributions paid		(11,924	)		(4,537	)		(7,387	)
Other		—			(596	)		596
Net cash (used in) provided by financing activities	$	(11,978	)	$	6,538		$	(18,516	)

During the three months ended March 31, 2019 and 2018, changes in total debt decreased $12.0 million. The decrease is primarily due to a decrease in draws from our Credit Facility during the three months ended March 31, 2019 compared to the three months ended March 31, 2018.  During the three months ended March 31, 2019 compared to the three months ended March 31, 2018 proceeds from the distribution reinvestment plan (as amended, the “DRP”) after shares repurchased increased $0.2 million. During the three months ended March 31, 2019 compared to the three months ended March 31, 2018, distributions increased from $4.5 million to $11.9 million as the 2018 distribution was for one month and the 2019 distribution was for three months.

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Distributions

For 2019 and 2018, distributions were payable quarterly in arrears. A summary of the distributions declared, distributions paid and cash flows provided by operations for the three months ended March 31, 2019 and 2018 follows (Dollar amounts in thousands except per share amounts):

					Distributions Paid (1)
Three Months Ended March 31,	Distributions Declared		Distributions Declared Per Share		Cash		Reinvested via DRP		Total		Cash Flows From Operations
2019	$	10,741	$	0.3018	$	6,461	$	5,463	$	11,924	$	10,567
2018	$	11,927	$	0.3350	$	2,283	$	2,254	$	4,537	$	11,842

(1) Distributions were funded by cash flow from operations and cash on hand during the three months ended March 31, 2019 and cash flow from operations in 2018.

Results of Operations

The following discussions are based on our consolidated financial statements for the three months ended March 31, 2019 and 2018. Dollar amounts are stated in thousands.

This section describes and compares our results of operations for the three months ended March 31, 2019 and 2018. We generate almost all of our net operating income from property operations. In order to evaluate our overall portfolio, management analyzes the net operating income of properties that we have owned and operated for both periods presented. Our portfolio of properties remains unchanged from March 31, 2018 to March 31, 2019, and therefore, the results for “non-same store” properties is not presented.

Comparison of the three months ended March 31, 2019 and March 31, 2018

For the three months ended March 31, 2019 and 2018, we owned 59 properties. The following table presents the property net operating income prior to straight-line income (expense), net, amortization of intangibles, interest, and depreciation and amortization for the three months ended March 31, 2019 and 2018, along with a reconciliation to net loss, calculated in accordance with U.S. GAAP.

	Three Months Ended March 31
	2019			2018			Change
Rental income	$	31,805		$	31,930		$	(125	)
Other property income		53			108			(55	)
Total income	$	31,858		$	32,038		$	(180	)
Property operating expenses	$	5,474		$	5,646		$	(172	)
Real estate tax expense		4,248			4,501			(253	)
Total property operating expenses	$	9,722		$	10,147		$	(425	)
Property net operating income	$	22,136		$	21,891		$	245
Straight-line income (expense), net	$	220		$	331		$	(111	)
Intangible amortization and inducement		196			115			81
General and administrative expenses		(1,512	)		(1,116	)		(396	)
Acquisition related costs		—			7			(7	)
Business management fee		(2,333	)		(2,328	)		(5	)
Depreciation and amortization		(14,526	)		(14,760	)		234
Interest expense		(7,153	)		(6,467	)		(686	)
Interest and other income		19			87			(68	)
Net loss	$	(2,953	)	$	(2,240	)	$	(713	)

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Net loss.  Net loss was $2,953 and $2,240 for the three months ended March 31, 2019 and 2018, respectively.

Total property net operating income.  Property net operating income increased $245 in 2019 compared to 2018, total property income decreased $180, and total property operating expenses including real estate tax expense decreased $425. The decrease in total property income is primarily due to a decrease in tenant recovery income.  The decrease in property operating expenses including real estate tax expense is primarily due to lower non-recoverable expenses in 2019 compared to 2018 and lower real estate tax consulting costs in 2019. 

Straight-line income (expense), net. Straight-line income (expense), net decreased $111 in 2019 compared to 2018. This decrease is primarily due to rent steps that reduced straight-line income.   

Intangible amortization.  Intangible amortization income increased $81 in 2019 compared to 2018. The increase is primarily attributable to intangible assets and liabilities being written off or fully amortized.

General and administrative expenses.  General and administrative expenses increased $396 in 2019 compared to 2018.  This increase is primarily due to higher legal costs and an increase in state tax estimates.

Acquisition related costs.  Acquisition related expenses decreased $7 in 2019 compared to 2018. The decrease is attributable to the fact that there were no acquisition related costs (recoveries) in 2019.

Business management fee.  Business management fees increased $5 in 2019 compared to 2018. The increase in the three months ended March 31, 2019 is due to capital expenditures which increased assets under management.  There have been no acquisitions since 2017.

Depreciation and amortization.  Depreciation and amortization decreased $234 in 2019 compared to 2018. The decrease is primarily due to fully amortized acquired lease intangible assets.

Interest expense. Interest expense increased $686 in 2019 compared to 2018. The increase is primarily due to higher average interest rates and an increase in average debt outstanding in 2019 compared to 2018.  Average interest rates increased 0.25% in 2019 compared to 2018 and average debt outstanding increased $12,775 in 2019 compared to 2018.

Interest and other income.  Interest and other income decreased $68 in 2019 compared to 2018.  The decrease is primarily due to interest earned on our note receivable which was fully impaired at the end of 2018.

Critical Accounting Policies

Disclosures discussing all critical accounting policies are set forth in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 20, 2019, under the heading “Critical Accounting Policies.” There have been no changes to our critical accounting policies during the three months ended March 31, 2019.

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.

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Leasing Activity

The following table sets forth leasing activity during the three months ended March 31, 2019. 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		21		67,247	$	18.50	$	18.20		1.6	%		4.7	$	—
Comparable New Leases		2		4,330	$	31.80	$	30.24		5.1	%		8.3	$	35.00
Non-Comparable New and Renewal Leases (a)		9		48,730	$	14.33	N/A		N/A				6.3	$	11.31
Total		32		120,307

(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 U.S. 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 U.S. 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 U.S. 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 U.S. 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, both before and after we have deployed all of our Offering proceeds and are no longer incurring a significant amount of acquisition fees or other related costs, 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 U.S. 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 U.S. 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

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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-U.S. 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 U.S. 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 U.S. 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 three months ended March 31, 2019 and 2018 are calculated as follows:

		Three Months Ended March 31,
		2019			2018
		(Dollar amounts in thousands)
	Net loss	$	(2,953	)	$	(2,240	)
Add:	Depreciation and amortization related to investment properties		14,526			14,760
	Funds from operations (FFO)	$	11,573		$	12,520
Add:	Acquisition related costs		—			(7	)
Less:	Amortization of acquired market lease intangibles, net		(208	)		(128	)
	Straight-line income (expense), net		(220	)		(331	)
	Modified funds from operations (MFFO)	$	11,145		$	12,054

Subsequent Events

For information related to subsequent events, reference is made to Note 14 – “Subsequent Events” which is included in our March 31, 2019 Notes to Consolidated Financial Statements in Item 1.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Market Risk

We are exposed to various market risks, including those caused by changes in interest rates and commodity prices. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and commodity prices. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We have entered into, and may continue to enter into, financial instruments to manage and reduce the impact of changes in interest rates. The counterparties are, and are expected to continue to be, major financial institutions.

Interest Rate Risk

We are exposed to interest rate changes primarily as a result of long-term debt used to purchase properties or other real estate assets and to fund capital expenditures.

As of March 31, 2019, we had outstanding debt of $709.0 million, excluding mortgage premium and unamortized debt issuance costs, bearing interest rates ranging from 2.95% to 5.48% per annum. The weighted average interest rate was 3.91%, which includes the effect of interest rate swaps. As of March 31, 2019, the weighted average years to maturity for our mortgages and credit facility payable was 4.2 years.

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As of March 31, 2019, our fixed-rate debt consisted of secured mortgage financings with a carrying value of $171.6 million and a fair value of $173.2 million. Changes in interest rates do not affect interest expense incurred on our fixed-rate debt until their maturity or earlier repayment, but interest rates do affect the fair value of our fixed rate debt obligations.  If market interest rates were to increase by 1% (100 basis points), the fair market value of our fixed-rate debt would decrease by $7.6 million at March 31, 2019. If market interest rates were to decrease by 1% (100 basis points), the fair market value of our fixed-rate debt would increase by $8.1 million at March 31, 2019.

As of March 31, 2019, we had $135.2 million of debt or 19.1% of our total debt, excluding mortgage premium and unamortized debt issuance costs, bearing interest at variable rates with a weighted average interest rate equal to 4.14% per annum. We had variable rate debt subject to swap agreements of $402.2 million, or 56.7% of our total debt, excluding mortgage premium and unamortized debt issuance costs, at March 31, 2019.

If interest rates on all debt which bears interest at variable rates as of March 31, 2019 increased by 1% (100 basis points), the increase in interest expense on all debt would decrease earnings and cash flows by $1.4 million annually. If interest rates on all debt which bears interest at variable rates as of March 31, 2019 decreased by 1% (100 basis points), the decrease in interest expense would increase earnings and cash flows by the same amount.

With regard to variable rate financing, our Business Manager assesses our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. Our Business Manager maintains risk management control systems to monitor interest rate cash flow risk attributable to both of our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions.

We use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions are determined in light of the facts and circumstances existing at the time of the hedge. We have used derivative financial instruments, specifically interest rate swap contracts, to hedge against interest rate fluctuations on variable rate debt, which exposes us to both credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us because the counterparty may not perform. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We seek to manage the market risk associated with interest-rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. There is no assurance we will be successful.

Derivatives

For information related to our derivatives, reference is made to Note 6 – “Debt and Derivative Instruments” which is included in our March 31, 2019 Notes to Consolidated Financial Statements in Item 1.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the principal executive and principal financial officers have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) or Rule 15d-15(f)) during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information

Item 1.  Legal Proceedings

We are not a party to, and none of our properties are subject to, any material pending legal proceedings.

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Item 1A.  Risk Factors

The following risk factors supplement the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2018.

We have incurred net losses on a U.S. GAAP basis for the quarterly period ended March 31, 2019.

We have incurred net losses on a U.S. GAAP basis for the three months ended March 31, 2019 of $2.9 million. Our losses can be attributed, in part, to non-cash expenses, such as depreciation and amortization. We may incur net losses in the future, which could have a material adverse impact on our financial condition, operations, cash flow, and our ability to service our indebtedness and pay distributions to our stockholders. We are subject to all of the business risks and uncertainties associated with any business. We cannot assure our stockholders that, in the future, we will be profitable or that we will realize growth in the value of our assets.

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.

We entered into a credit agreement, as amended, for a $350.0 million credit facility (the “Credit Facility”) consisting of a revolving credit facility providing initial revolving credit commitments in an aggregate amount of $200.0 million Revolving Credit Facility and a term loan facility providing initial term loan commitments in an aggregate amount of $150.0 million (the “Term Loan”).  The credit agreement provides us with the ability from time to time to increase the size of the Credit Facility, subject to certain conditions. Our performance of the obligations under the credit agreement, including the payment of any outstanding indebtedness, is secured by a minimum pool of ten unencumbered properties with an unencumbered pool value of $200.0 million or above and by a guaranty by certain of our subsidiaries. As of March 31, 2019, we have borrowed $284.5 million of the $350 million available under the Credit Facility. Our availability under the Credit Facility was $65.5 million as of March 31, 2019.

The credit agreement requires compliance with certain financial covenants, including, among other conditions, a minimum tangible net worth requirement, restrictions on indebtedness, a distribution limitation and other material covenants. These covenants could inhibit our ability to make distributions to our stockholders and to pursue certain business initiatives or effect certain transactions that might otherwise be beneficial to us. For example, without lender consent, we may not declare and pay distributions or honor any redemption requests if any default under the agreement then exists or if distributions, excluding any distributions reinvested through our DRP, for the then-current quarter and the three immediately preceding quarters would exceed 95% of our FFO, excluding acquisition expenses, or “adjusted FFO,” for that period. For the fiscal quarter ended March 31, 2019, distributions did not exceed 95% of our adjusted FFO.

The credit agreement also provides for several customary events of default, including, among other things, the failure to comply with our covenants and the failure to pay when amounts outstanding under the credit agreement become due. Declaration of a default by the lenders under the credit agreement could restrict our ability to borrow additional monies and could cause all amounts to become immediately due and payable, which would materially adversely affect our liquidity and financial condition.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Equity Securities

During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act.

Share Repurchase Program

We adopted the SRP effective October 18, 2012, under which we are authorized to purchase shares from stockholders who purchased their shares from us or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested, if we choose to purchase them. In the case of “exceptional repurchases,” the one year holding period does not apply. The SRP was amended and restated effective January 1, 2018 to change the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions. On February 11, 2019, our board adopted a second amended and restated SRP (the “A&R SRP”), effective March 21, 2019.

Under the A&R SRP, we are authorized to make ordinary repurchases at a price equal to 80.0% of the “share price,” which is defined in the A&R SRP as an amount equal to the lesser of: (A) $25, as adjusted under certain circumstances, including, among other things, if the applicable shares were purchased from the Company at a discounted price; or (B) the most recently disclosed estimated value

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per share. Prior to the amendment, we were authorized to make ordinary repurchases at a price ranging from 92.5% to 100% of the “share price.” In the case of “exceptional repurchases,” we may repurchase shares at a price equal to 100% of the “share price.”

The A&R SRP provides our board of directors with the discretion to reduce the funding limit for share repurchases.  Prior to the amendment, the funding for ordinary repurchases was limited to the proceeds from the DRP during a particular quarter.  The A&R SRP limits the dollar amount for any repurchases made by us each calendar quarter to an amount equal to a percentage determined in the sole discretion of our board on a quarterly basis that will not be less than 50% of the net proceeds from the DRP during the applicable quarter.  For the quarter ended March 31, 2019, our board determined a funding limit equal to 50% of the net proceeds from the DRP for the quarter ended March 31, 2019. We continue to limit the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted for any stock splits or other combinations.

If either or both of the repurchase limitations prevent us from repurchasing all of the shares offered for repurchase during a calendar quarter, we will repurchase shares, on a pro rata basis within each category below, in accordance with the repurchase limitations in the following order: (a) first, all repurchases sought upon a stockholder’s death or qualifying disability and (b) second, all ordinary repurchases. The A&R SRP provides that a requesting party must own shares of at least $500 after giving effect to any repurchase by the Company. If a requesting party would fail to maintain this minimum balance after giving effect to any repurchase, we may, in our discretion, repurchase the remaining balance of shares which is less than $500, subject to the 5% share limit described above.

The SRP will immediately terminate if our shares are listed on any national securities exchange. In addition, our board of directors, in its sole discretion, may amend, suspend (in whole or in part), or terminate our SRP. In the event that we amend, suspend or terminate the SRP, however, we will send stockholders notice of the change at least thirty days prior to the change, and we will disclose the change in a report filed with the Securities and Exchange Commission on either Form 8-K, Form 10-Q or Form 10-K, as appropriate. Further, our board reserves the right in its sole discretion, at any time, and from time to time to reject any requests for repurchases.

The table below outlines the shares we repurchased pursuant to our SRP during the three months ended March 31, 2019.

(Dollar amounts in thousands, except per share amounts)

Period	Total Shares Requested to be Repurchased		Total Number of Shares Repurchased		Average Price Paid per Share		Amount of Shares Repurchased		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(1)		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
January 2019		—		—		—		—		—		1,767,163
February 2019		—		—		—		—		—		1,767,163
March 2019		320,108		140,288	$	17.12	$	2,402		140,288		1,626,875
Total		320,108		140,288	$	17.12	$	2,402		140,288

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not Applicable.

Item 5.  Other Information

Not Applicable.

Item 6.  Exhibits

The representations, warranties and covenants made by us in any agreement filed as an exhibit to this Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the

33

agreement, and should not be deemed to be representations, warranties or covenants to, or with, you. Moreover, these representations, warranties and covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.

The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto and are incorporated herein by reference.

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Exhibit Index

Exhibit No.	Description
3.1	Second Articles of Amendment and Restatement of Inland Real Estate Income Trust, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 5 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 11, 2012 (file number 333-176775))
3.2	Inland Real Estate Income Trust, Inc. Articles of Amendment (Reverse Stock Split) (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on January 16, 2018 (file number 000-55146))
3.3	Inland Real Estate Income Trust, Inc. Articles of Amendment (Par Value Decrease) (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on January 16, 2018 (file number 000-55146))
3.4	Second Amended and Restated Bylaws of Inland Real Estate Income Trust, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on August 13, 2015 (file number 000-55146))
4.1	Second Amended and Restated Share Repurchase Program, effective March 21, 2019 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on February 15, 2019 (file number 000-55146))
10.1	Amended and Restated Business Management Agreement, dated as of February 11, 2019, by and between Inland Real Estate Income Trust, Inc. and IREIT Business Manager & Advisor, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on February 15, 2019 (file number 000-55146))
31.1	Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification by Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification by Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101	The following financial information from our Quarterly Report on Form 10-Q for the period ended March 31, 2019, filed with the Securities and Exchange Commission on May 15, 2019 is formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive (Loss) Income; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements (tagged as blocks of text)

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INLAND REAL ESTATE INCOME TRUST, INC.
	/s/ Mitchell A. Sabshon
By:	Mitchell A. Sabshon
	President and Chief Executive Officer (principal executive officer)
Date:	May 15, 2019
	/s/ Catherine L. Lynch
By:	Catherine L. Lynch
	Chief Financial Officer and Treasurer (principal financial officer)
Date:	May 15, 2019

36

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Mitchell A. Sabshon, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Inland Real Estate Income Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Mitchell A. Sabshon
Name:	Mitchell A. Sabshon
Title:	President and Chief Executive Officer (Principal Executive Officer)
Date:	May 15, 2019

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Catherine L. Lynch, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Inland Real Estate Income Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ Catherine L. Lynch
Name:	Catherine L. Lynch
Title:	Chief Financial Officer and Treasurer
	(Principal Financial Officer)
Date:	May 15, 2019

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Inland Real Estate Income Trust, Inc. (the “Company”) for the fiscal quarter ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Mitchell A. Sabshon, President and Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2019	By:	/s/ Mitchell A. Sabshon
	Name:	Mitchell A. Sabshon
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Inland Real Estate Income Trust, Inc. (the “Company”) for the fiscal quarter ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Catherine L. Lynch, Chief Financial Officer and Treasurer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of her knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 15, 2019	By:	/s/ Catherine L. Lynch
	Name:	Catherine L. Lynch
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial Officer)

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 06, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	Inland Real Estate Income Trust, Inc.
Entity Central Index Key	0001528985
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		35,690,942
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

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CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Investment properties:
Land	$ 277,229	$ 277,229
Building and other improvements	1,022,042	1,021,607
Total	1,299,271	1,298,836
Less accumulated depreciation	(148,719)	(139,134)
Net investment properties	1,150,552	1,159,702
Cash and cash equivalents	13,023	15,239
Restricted cash	1,001	1,001
Accounts and rent receivable, net	16,441	16,176
Acquired lease intangible assets, net	109,612	115,357
Deferred costs, net	2,744	2,570
Operating lease right-of-use asset, net	15,840
Other assets	6,854	10,024
Total assets	1,316,067	1,320,069
Liabilities:
Mortgages and credit facility payable, net	705,980	705,884
Accounts payable and accrued expenses	9,652	8,849
Operating lease liability	23,455
Distributions payable	10,741	11,924
Acquired intangible liabilities, net	51,485	57,462
Due to related parties	2,715	2,604
Other liabilities	10,125	16,268
Total liabilities	814,153	802,991
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value, 40,000,000 shares authorized, none outstanding
Common stock, $.001 par value, 1,460,000,000 shares authorized, 35,447,385 and 35,343,256 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	35	35
Additional paid in capital	798,483	795,409
Accumulated distributions and net loss	(297,443)	(283,859)
Accumulated other comprehensive income	839	5,493
Total stockholders’ equity	501,914	517,078
Total liabilities and stockholders’ equity	$ 1,316,067	$ 1,320,069

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	40,000,000	40,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	1,460,000,000	1,460,000,000
Common stock, shares issued	35,447,385	35,343,256
Common stock, shares outstanding	35,447,385	35,343,256

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income:
Total income	$ 32,475	$ 32,648
Cost and Expenses:
Property operating expenses	5,675	5,810
Real estate tax expense	4,248	4,501
General and administrative expenses	1,512	1,116
Acquisition related costs		(7)
Business management fee	2,333	2,328
Depreciation and amortization	14,526	14,760
Total expenses	28,294	28,508
Operating income	4,181	4,140
Interest expense	(7,153)	(6,467)
Interest and other income	19	87
Net loss	$ (2,953)	$ (2,240)
Net loss per common share, basic and diluted	$ (0.08)	$ (0.06)
Weighted average number of common shares outstanding, basic and diluted	35,583,398	35,594,052
Comprehensive (loss) income:
Net loss	$ (2,953)	$ (2,240)
Unrealized (loss) gain on derivatives	(4,200)	4,826
Reclassification adjustment for amounts included in net loss	(454)	133
Comprehensive (loss) income	(7,607)	2,719
Rental Income [Member]
Income:
Total income	32,422	32,540
Other Property Income [Member]
Income:
Total income	$ 53	$ 108

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CONSOLIDATED STATEMENT OF EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid In Capital [Member]	Accumulated Distributions and Net Loss [Member]	Accumulated Other Comprehensive Income [Member]
Balance at Dec. 31, 2017	$ 591,472	$ 35	$ 798,567	$ (212,883)	$ 5,753
Balance, shares at Dec. 31, 2017		35,498,444
Distributions declared	(11,927)			(11,927)
Proceeds from distribution reinvestment plan	2,254		2,254
Proceeds from distribution reinvestment plan, shares		99,636
Shares repurchased	(5,782)		(5,782)
Shares repurchased, shares		(262,792)
Unrealized (loss) gain on derivatives	4,826				4,826
Reclassification adjustment for amounts included in net loss	133				133
Equity based compensation	10		10
Net loss	(2,240)			(2,240)
Balance at Mar. 31, 2018	578,746	$ 35	795,049	(227,050)	10,712
Balance, shares at Mar. 31, 2018		35,335,288
Balance at Dec. 31, 2018	$ 517,078	$ 35	795,409	(283,859)	5,493
Balance, shares at Dec. 31, 2018	35,343,256	35,343,256
Distributions declared	$ (10,741)			(10,741)
Proceeds from distribution reinvestment plan	$ 5,463		5,463
Proceeds from distribution reinvestment plan, shares	4,643,680	244,417
Shares repurchased	$ (2,402)		(2,402)
Shares repurchased, shares	(2,731,757)	(140,288)
Unrealized (loss) gain on derivatives	$ (4,200)				(4,200)
Reclassification adjustment for amounts included in net loss	(320)				(320)
Cumulative reversal of recognized hedge ineffectiveness (see Note 2)				134	(134)
Cumulative-effect adjustment recognized upon adoption of ASC 842 (see Note 2)	(24)			(24)
Equity based compensation	13		13
Net loss	(2,953)			(2,953)
Balance at Mar. 31, 2019	$ 501,914	$ 35	$ 798,483	$ (297,443)	$ 839
Balance, shares at Mar. 31, 2019	35,447,385	35,447,385

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CONSOLIDATED STATEMENT OF EQUITY (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Statement Of Stockholders Equity [Abstract]
Distributions declared per share	$ 0.3018	$ 0.335	$ 0.335

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (2,953)	$ (2,240)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	14,526	14,760
Amortization of debt issuance costs and mortgage premiums, net	150	135
Amortization of acquired market leases, net	(208)	(128)
Amortization of equity based compensation	13	11
Amortization of right-of-use-asset	123
Straight-line income, net	(421)	(331)
Payment of leasing fees	(255)	(719)
Adjustment of contingent earnout liability		(25)
Other non-cash adjustments	4	7
Changes in assets and liabilities:
Accounts payable and accrued expenses	1,050	(1,414)
Accounts and rent receivable	131	925
Due to related parties	2	140
Operating lease liability	78
Other liabilities	(1,895)	301
Other assets	222	420
Net cash flows provided by operating activities	10,567	11,842
Cash flows from investing activities:
Capital expenditures	(805)	(2,275)
Investment in unconsolidated joint ventures		(1,856)
Other assets and other liabilities		(4,939)
Net cash flows used in investing activities	(805)	(9,070)
Cash flows from financing activities:
Payment of credit facility		(8,000)
Proceeds from credit facility		20,000
Payment of mortgages payable	(54)	(52)
Proceeds from the distribution reinvestment plan	5,463	2,254
Shares repurchased	(5,463)	(2,531)
Distributions paid	(11,924)	(4,537)
Payment of deferred investment property acquisition obligations		(596)
Net cash flows (used in) provided by financing activities	(11,978)	6,538
Net (decrease) increase in cash, cash equivalents and restricted cash	(2,216)	9,310
Cash, cash equivalents and restricted cash, at beginning of the period	16,240	16,844
Cash, cash equivalents and restricted cash, at end of period	14,024	26,154
Supplemental disclosure of cash flow information:
Cash paid for interest	6,778	6,364
Supplemental schedule of non-cash investing and financing activities:
Establishment of operating lease right-of-use asset	15,963
Establishment of operating lease liability	23,377
Accrued SRP	2,402	5,782
Distributions payable	$ 10,741	$ 11,927

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Organization

3 Months Ended

Mar. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

NOTE 1 – ORGANIZATION

The Company was formed on August 24, 2011 to acquire and manage a portfolio of commercial real estate investments located in the United States. The Company has primarily focused on acquiring retail properties and intends to target a portfolio of 100% grocery-anchored properties. The Company has invested in joint ventures and may continue to invest in additional joint ventures or acquire other real estate assets if its management believes the expected returns from those investments exceed that of retail properties. The Company also may invest in real estate-related equity securities of both publicly traded and private real estate companies, as well as commercial mortgage-backed securities.

The Company has no employees. The Company is managed by IREIT Business Manager & Advisor, Inc. (the “Business Manager”), an indirect wholly owned subsidiary of Inland Real Estate Investment Corporation (the “Sponsor”), pursuant to a Business Management Agreement with the Business Manager.

On February 11, 2019, the Company’s board of directors approved a strategic plan (the “Strategic Plan”) with the goals of providing future liquidity to investors and creating long-term stockholder value. The Strategic Plan centers around owning a portfolio of 100% grocery-anchored properties with lower exposure to big box retailers. As part of this strategy, the Company’s management team and board will consider the opportunistic sale of certain assets with the goal of redeploying capital into the acquisition of strategically located grocery-anchored centers, as well as the redevelopment of select centers within the current portfolio. The Company plans to move toward a liquidity event in the next 24 to 36 months, or sooner, market conditions permitting, most likely through a listing on a public securities exchange. In connection with the Strategic Plan, the board approved amendments to the Company’s share repurchase program (as amended, the “SRP”) as further described below in Note 3 – “Equity,” and the Business Management Agreement with the Business Manager was amended and restated on February 11, 2019 to, among other things, eliminate all future acquisition and disposition fees. There can be no assurance that the Strategic Plan will not evolve or change over time or that the Company will be able to successfully implement the Strategic Plan, including listing the Company’s common stock.

On March 11, 2019, as reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on the same date, the Company announced that the Company’s board of directors unanimously approved: (i) an estimated per share net asset value (the “Estimated Per Share NAV”) as of December 31, 2018; (ii) the same per share purchase price for shares issued under the Company’s distribution reinvestment plan (as amended, the “DRP”) beginning with the first quarter distribution payment to stockholders in April 2019 until the Company announces a new Estimated Per Share NAV, and (iii) that, in accordance with the SRP, beginning with repurchases in April 2019 and until the Company announces a new Estimated Per Share NAV, any shares accepted for ordinary repurchases will be repurchased at 80% of the Estimated Per Share NAV and any shares accepted for “exceptional repurchases” will be repurchased at the Estimated Per Share NAV.

At March 31, 2019, the Company owned 59 retail properties, totaling 6,870,124 square feet.  The properties are located in 24 states.  At March 31, 2019, the portfolio had a weighted average physical occupancy of 94.0% and economic occupancy of 94.4%.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Disclosures discussing all significant accounting policies are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 20, 2019, under the heading Note 2 – “Summary of Significant Accounting Policies.” There have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2019, except as noted below. 

General

The consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation.

Recently Adopted Accounting Pronouncements

In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Among other things, the guidance eliminated the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. As ASU 2017-12 was effective for fiscal years beginning after December 15, 2018, the Company adopted the ASU on January 1, 2019 with a modified retrospective transition. For cash flow hedges existing at January 1, 2019, the Company eliminated the separate measurement of ineffectiveness by means of a cumulative reversal of recognized hedge ineffectiveness with a credit to the opening balance of accumulated distributions and net loss and a debit to accumulated other comprehensive income of $134 on its consolidated balance sheet and consolidated statement of equity.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) which amends the guidance in ASC Topic 840, Leases. The Company adopted the lease standard effective January 1, 2019. As a lessor, the Company’s recognition of rental income remained mainly consistent with previous guidance. As a result of the adoption of ASC 842, the Company includes both billed and accrued charges in its quarterly evaluation of the collectability of a tenant’s receivable balance. Prior to the adoption of ASC 842, uncollectible tenant revenues were recorded as bad debt expense in property operating expenses on our consolidated statement of operations and comprehensive loss. For tenant receivables that the Company determines to be uncollectible, the Company now records an offset for uncollectible tenant revenues directly to rental income. Upon adoption of ASC 842 on January 1, 2019, a cumulative-effect adjustment of $24 was recognized for uncollectible tenant revenues as a result of this change. The standard’s changes related to capitalized initial direct costs did not impact the Company’s accounting for such costs, because historically, the Company capitalized initial direct costs (commissions) that are still considered capitalizable under the new standard.

As part of its adoption of the lease standard, the Company has elected and qualifies to utilize the practical expedient in ASU No. 2018-11, Targeted Improvements, Leases (Topic 842) issued in July 2018, which allows, by class of underlying assets, to not separate non-lease components from the related lease components and, instead, to account for those components as a single lease. This practical expedient for lessors is limited to circumstances in which the non-lease component or components would be accounted for under the new revenue guidance and both (1) the timing and pattern of transfer are the same for the non-lease component(s) and associated lease component and (2) the lease component, if accounted for separately, would be classified as an operating lease.

The Company also elected the package of practical expedients in ASU No. 2018-11, which permitted the Company to adopt the new leases standard under a transition method whereby it initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Therefore, the Company adopted ASU No. 2016-02 on its effective date without restating comparative periods and utilized the practical expedients available in the amendment as part of its adoption. The package of practical expedients included relief from re-assessing a lease using the standard’s new definition of a lease, relief from re-assessing the classification of a lease and allowing previously capitalized initial direct costs (see above) to continue to be amortized. The adoption of the package of practical expedients, as a lessor, did not require the Company to recognize a cumulative effect adjustment.

For lessees, ASU No. 2016-02 establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company is the lessee of a ground lease. The Company has elected the practical expedient that, for leases that commenced before the effective date, the lessee need not reassess whether the contract is a lease nor reassess lease classification for existing leases. The lease liability for the ground lease was based on the present value of the ground lease’s future lease payments using an interest rate which it considers reasonable and within the range of the Company’s incremental borrowing rate. At January 1, 2019, the Company recorded a lease liability of $23,377 and a ROU asset of $15,963 on its consolidated balance sheet. Rental expense for lease payments related to the operating lease will continue to be recognized on a straight-line basis over the lease term.

Restricted Cash

Amounts included in restricted cash represent those required to be set aside by lenders for real estate taxes, insurance, capital expenditures and tenant improvements on our existing properties. These amounts also include post close escrows for tenant improvements, leasing commissions, master lease, general repairs and maintenance, and are classified as restricted cash on the Company’s consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Company’s consolidated balance sheets to such amounts shown in the Company’s consolidated statements of cash flows:

	March 31,
	2019		2018
Cash and cash equivalents	$	13,023	$	21,506
Restricted cash		1,001		4,648
Total cash, cash equivalents, and restricted cash	$	14,024	$	26,154

Income Tax

During the year ended December 31, 2018, the Company recorded an impairment charge of $15,405 related to its investment in Mainstreet Texas Development Fund, LLC, a joint venture formed to develop three transitional care/rapid recovery centers (“Mainstreet JV”). As a result, the Company will likely recognize either a capital or net operating loss or a combination thereof, for income tax purposes, from this venture in the future. The Company’s investment in Mainstreet JV is held through a taxable REIT subsidiary. Based on an effective tax rate of 28.51%, which is calculated by combining a 21% Federal tax rate and an IL tax rate of 7.51% (9.5% state rate net of the Federal benefit), the deferred tax benefit related to the impairment is approximately $4,400. Since the taxable REIT subsidiary does not currently conduct any activities outside the investment in Mainstreet JV, management does not believe it is more likely than not that the taxable REIT subsidiary will be able to utilize these losses in future tax periods. As a result, management recorded a full valuation allowance of $4,400 to account for this uncertainty.

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Equity

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Equity

NOTE 3 – EQUITY

The Company commenced an initial public “best efforts” offering (the “Offering”) on October 18, 2012, which concluded on October 16, 2015. The Company issued 33,534,022 shares of common stock generating gross proceeds of $834,399 from the Offering.  As of March 31, 2019, there were 35,447,385 shares of common stock outstanding including 4,643,680 shares issued through the DRP, net of 2,731,757 shares repurchased through the SRP.    

On March 5, 2019, the Company’s board of directors determined the Estimated Per Share NAV as of December 31, 2018. The previously Estimated Per Share NAV as of December 31, 2017 was established on March 20, 2018.

The Company provides the following programs to facilitate additional investment in the Company’s shares and to provide limited liquidity for stockholders.

Distribution Reinvestment Plan

Through the DRP, the Company provides stockholders with the option to purchase additional shares from the Company by automatically reinvesting cash distributions, subject to certain share ownership restrictions. The Company does not pay any selling commissions or a marketing contribution and due diligence expense allowance in connection with the DRP. Pursuant to the DRP, the price per share for shares of common stock purchased under the DRP is equal to the estimated value of a share, as determined by the Company’s board of directors and reported by the Company from time to time, until the shares become listed for trading, if a listing occurs, assuming that the DRP has not been terminated or suspended in connection with such listing.

Distributions reinvested through the DRP were $5,463 and $2,254 for the three months ended March 31, 2019 and 2018, respectively.

Share Repurchase Program

The Company adopted the SRP effective October 18, 2012, under which the Company is authorized to purchase shares from stockholders who purchased their shares from the Company or received their shares through a non-cash transfer and who have held their shares for at least one year, if requested, if the Company chooses to purchase them. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, the one year holding period does not apply. The SRP was amended and restated effective January 1, 2018 to change the processing of repurchase requests from a monthly to a quarterly basis to align with the move to quarterly distributions. On February 11, 2019, the Company’s board of directors adopted a second amended and restated SRP (the “A&R SRP”), effective March 21, 2019. Under the A&R SRP, the Company is authorized to make ordinary repurchases at a price equal to 80.0% of the “share price,” which is defined in the A&R SRP as an amount equal to the lesser of: (A) $25, as adjusted under certain circumstances, including, among other things, if the applicable shares were purchased from the Company at a discounted price; or (B) the most recently disclosed estimated value per share. Prior to the amendment, the Company was authorized to make ordinary repurchases at a price ranging from 92.5% to 100% of the “share price.” The Company may repurchase shares upon a stockholder’s death or qualifying disability at a price equal to 100% of the “share price.”

The A&R SRP provides the Company’s board of directors with the discretion to reduce the funding limit for share repurchases.  Prior to the amendment, the funding for ordinary repurchases was limited to the proceeds from the DRP during a particular quarter.  The A&R SRP limits the dollar amount for any repurchases made by the Company each calendar quarter to an amount equal to a percentage determined in the sole discretion of the board on a quarterly basis that will not be less than 50% of the net proceeds from the DRP during the applicable quarter.  The Company continues to limit the number of shares repurchased during any calendar year to 5% of the number of shares outstanding on December 31st of the previous calendar year, as adjusted for any stock splits or other combinations.

If either or both of the repurchase limitations prevent the Company from repurchasing all of the shares offered for repurchase during a calendar quarter, the Company will repurchase shares, on a pro rata basis within each category below, in accordance with the repurchase limitations in the following order: (a) first, all repurchases sought upon a stockholder’s death or qualifying disability and (b) second, all ordinary repurchases. The SRP will immediately terminate if the Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP.

Repurchases through the SRP were $2,402 and $5,782 for the three months ended March 31, 2019 and 2018, respectively. At March 31, 2019 and December 31, 2018, the Company’s liability related to the SRP was $2,402 and $5,463, respectively, recorded in other liabilities on the Company’s consolidated balance sheets.

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

NOTE 4 – LEASES

The Company is lessor to over 700 retail operating leases. The remaining lease terms for the Company’s leases range from less than one year to 19 years. The Company considers the date on which it makes a leased space available to a lessee as the commencement date of the lease. At commencement, the Company determines the lease classification utilizing the classification tests under ASC 842. Options to extend a lease are included in the lease term when it is reasonably certain that the tenant will exercise its option to extend. Termination penalties are included in income when there is a termination agreement, all the conditions of the agreement have been met and amounts due are considered collectible. Such termination fees are recognized on a straight-line basis over the remaining lease term in rental income. If an operating lease is modified and the modification is not accounted for as a separate contract, the Company accounts for the modification as if it were a termination of the existing lease and the creation of a new lease.  The Company considers any prepaid or accrued rentals relating to the original lease as part of the lease payments for the modified lease. The Company includes options to modify the original lease term when it is reasonably certain that the tenant will exercise its option to extend.

Lease Income

Most of the revenue from the Company’s properties consists of rents received under long-term operating leases. Most leases require the tenant to pay fixed base rent paid monthly in advance, and to reimburse the Company for the tenant’s pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the Company and recoverable under the terms of the lease. Under these leases, the Company pays all expenses and is reimbursed by the tenant for the tenant’s pro rata share of recoverable expenses paid.

Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the consolidated statements of operations and comprehensive loss. Under leases where all expenses are paid by the Company, subject to reimbursement by the tenant, the expenses are included within property operating expenses. As of January 1, 2019, the date on which the Company adopted the new leasing standard, reimbursements for common area maintenance are considered non-lease components that are permitted to be combined with rental income. The combined lease component and reimbursements for insurance and taxes are reported as rental income on the consolidated statement of operations and comprehensive loss.  

Rental income related to the Company's operating leases is comprised of the following:

	Three Months Ended March 31, 2019
Rental income - fixed payments	$	25,495
Rental income - variable payments (a)		6,719
Amortization of acquired market leases, net	208
Rental income	$	32,422

(a) Primarily includes tenant recovery income for real estate taxes, common area maintenance and insurance.

The future base rent payments to be received under operating leases including ground leases as of March 31, 2019 for the years indicated, assuming no expiring leases are renewed, are as follows:

	Lease Payments
2019 (remainder of year)	$	69,772
2020		87,211
2021		81,620
2022		71,831
2023		60,319
Thereafter		196,840
Total	$	567,593

Lease Expense

The Company is the lessee of one ground lease.  The ground lease, which commenced on July 1, 2007, was assumed as part of a property purchase in October 2015 and extends through June 30, 2037 with six 5-year renewal options which the Company assumes will be exercised. At commencement of the lease, the Company considered the lease terms and lease classification. As reassessment is not required under practical expedients accorded in ASC 842, the Company will continue to account for the ground lease as an operating lease with an established lease term and payment schedule. At January 1, 2019, the Company recorded a lease liability of $23,377 and a ROU asset of $15,963 on its consolidated balance sheet. The lease liability was based on the present value of the ground lease’s future lease payments using an interest rate of 6.32% which the Company considers reasonable and within the range of the Company’s incremental borrowing rate.

Lease payments for the ground lease as of March 31, 2019 for each of the five succeeding years and thereafter is as follows:  

	Lease Payments
2019 (remainder of year)	$	855
2020		1,140
2021		1,140
2022		1,202
2023		1,264
Thereafter		88,376
Total	$	93,977

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Acquired Intangible Assets and Liabilities

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Acquired Intangible Assets and Liabilities

NOTE 5 – ACQUIRED INTANGIBLE ASSETS AND LIABILITIES

The following table summarizes the Company’s identified intangible assets and liabilities as of March 31, 2019 and December 31, 2018: 

	March 31, 2019			December 31, 2018
Intangible assets:
Acquired in-place lease value	$	165,182		$	165,182
Acquired above market lease value		45,824			45,824
Accumulated amortization		(101,394	)		(95,649	)
Acquired lease intangibles, net	$	109,612		$	115,357
Intangible liabilities:
Acquired below market lease value	$	71,551		$	71,551
Acquired above market ground lease		—			5,169
Accumulated amortization		(20,066	)		(19,258	)
Acquired below market lease intangibles, net	$	51,485		$	57,462

As of March 31, 2019, the weighted average amortization periods for acquired in-place lease, above market lease intangibles and below market lease intangibles are 10, 14, and 19 years, respectively.

The portion of the purchase price allocated to acquired above market lease value and acquired below market lease value is amortized on a straight-line basis over the term of the related lease as an adjustment to rental income. For below market lease values, the amortization period includes any renewal periods with fixed rate renewals. Prior to January 1, 2019, the acquired above market ground lease was amortized on a straight-line basis as an adjustment to property operating expense over the term of the lease and included renewal periods. At date of the adoption of ASC 842 on January 1, 2019, the remaining balance of the intangible related to the above market ground lease was derecognized as a cumulative-effect adjustment to establish the operating lease ROU asset.  The portion of the purchase price allocated to acquired in-place lease value is amortized on a straight-line basis over the acquired leases’ weighted average remaining term.

Amortization pertaining to acquired in-place lease value, above market ground lease, above market lease value and below market lease value is summarized below:

	Three Months Ended March 31,
Amortization recorded as amortization expense:	2019			2018
Acquired in-place lease value	$	4,841		$	5,071
Amortization recorded as a reduction to property operating expense:
Acquired above market ground lease	$	—		$	23
Amortization recorded as a (reduction) increase to rental income:
Acquired above market leases	$	(904	)	$	(1,030	)
Acquired below market leases		1,112			1,135
Net rental income increase	$	208		$	105

Estimated amortization of the respective intangible lease assets and liabilities as of March 31, 2019 for each of the five succeeding years and thereafter is as follows:  

	Acquired In-Place Leases		Above Market Leases		Below Market Leases
2019 (remainder of year)	$	12,420	$	2,526	$	3,208
2020		13,801		3,057		4,070
2021		11,354		2,988		3,889
2022		8,714		2,684		3,630
2023		7,458		2,489		3,347
Thereafter		26,301		15,820		33,341
Total	$	80,048	$	29,564	$	51,485

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Debt and Derivative Instruments

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt and Derivative Instruments

NOTE 6 – DEBT AND DERIVATIVE INSTRUMENTS

As of March 31, 2019 and December 31, 2018, the Company had the following mortgages and credit facility payable:

	March 31, 2019						December 31, 2018
Type of Debt	Principal Amount			Weighted Average Interest Rate			Principal Amount			Weighted Average Interest Rate
Fixed rate mortgages payable	$	171,592			4.25	%	$	171,646			4.25	%
Variable rate mortgages payable with swap agreements		252,244			3.33	%		252,244			3.33	%
Variable rate mortgages payable		684			4.09	%		684			3.95	%
Mortgages payable	$	424,520			3.71	%	$	424,574			3.71	%
Credit facility payable		284,523			4.22	%		284,523			4.22	%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$	709,043			3.91	%	$	709,097			3.91	%
Add: Unamortized mortgage premiums		1,525						1,683
Less: Unamortized debt issuance costs		(4,588	)					(4,896	)
Total debt	$	705,980					$	705,884

The Company estimates the fair value of its total debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by the Company’s lenders using Level 3 inputs.  The carrying value of the Company’s debt excluding mortgage premium and unamortized debt issuance costs was $709,043 and $709,097 as of March 31, 2019 and December 31, 2018, respectively, and its estimated fair value was $711,066 and $709,737 as of March 31, 2019 and December 31, 2018, respectively.

As of March 31, 2019, scheduled principal payments and maturities on the Company’s debt were as follows:

	March 31, 2019
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgage Loans		Maturity of Credit Facility		Total
2019 (remainder of the year)	$	178	$	7,447	$	—	$	7,625
2020		897		—		—		897
2021		1,531		82,740		—		84,271
2022		615		101,537		134,523		236,675
2023		326		91,230		150,000		241,556
Thereafter		636		137,383		—		138,019
Total	$	4,183	$	420,337	$	284,523	$	709,043

Credit Facility Payable

The Company’s credit facility (the “Credit Facility”) consisting of a $200,000 revolving credit facility (the “Revolving Credit Facility”) and a $150,000 term loan (the “Term Loan”) has an accordion feature that allows for an increase in available borrowings up to $700,000, subject to certain conditions.

At March 31, 2019, the Company has $134,523 outstanding under the Revolving Credit Facility and $150,000 outstanding under the Term Loan.  At March 31, 2019 the interest rate on the Revolving Credit Facility and the Term Loan was 4.14% and 4.29%, respectively. The Revolving Credit Facility matures on August 1, 2022, and the Company has the option to extend the maturity date for one additional year subject to the payment of an extension fee and certain other conditions.  The Term Loan matures on August 1, 2023. As of March 31, 2019 the Company had $65,477 available for borrowing under the Revolving Credit Facility.

The Company’s performance of the obligations under the Credit Facility, including the payment of any outstanding indebtedness under the Credit Facility, is guaranteed by certain subsidiaries of the Company, including each of the subsidiaries of the Company which owns or leases any of the properties included in the pool of unencumbered properties comprising the borrowing base.  Additional properties will be added to and removed from the pool from time to time to support amounts borrowed under the Credit Facility. At March 31, 2019, there were 28 properties included in the pool of unencumbered properties.

The Credit Facility requires compliance with certain covenants, including a minimum tangible net worth requirement, a distribution limitation, restrictions on indebtedness and investment restrictions, as defined. It also contains customary default provisions including the failure to comply with the Company's covenants and the failure to pay when amounts outstanding under the Credit Facility become due.  The Company is in compliance with all financial covenants related to the Credit Facility.

Mortgages Payable

The mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. As of March 31, 2019, the Company was current on all of the payments and in compliance with all financial covenants. All of the Company’s mortgage loans are secured by first mortgages on the respective real estate assets. As of March 31, 2019, the weighted average years to maturity for the Company’s mortgages payable was 4.3 years.  

Interest Rate Swap Agreements

The Company entered into interest rate swaps to fix certain of its floating LIBOR based debt under variable rate loans to a fixed rate to manage its risk exposure to interest rate fluctuations. The Company will generally match the maturity of the underlying variable rate debt with the maturity date on the interest swap. See Note 14 - "Fair Value Measurements" for further information.

The following table summarizes the Company’s interest rate swap contracts outstanding as of March 31, 2019.

Date Entered	Effective Date	Maturity Date	Pay Fixed Rate (a)			Notional Amount		Fair Value at March 31, 2019
Assets
February 11, 2015	March 2, 2015	March 1, 2022		2.02	%		6,114		26
April 7, 2015	April 7, 2015	April 7, 2022		1.74	%		49,400		608
September 17, 2015	September 17, 2015	September 17, 2022		1.90	%		13,700		118
October 2, 2015	November 1, 2015	November 1, 2022		1.79	%		13,100		163
January 25, 2016	February 1, 2016	February 1, 2021		1.40	%		38,000		586
June 7, 2016	July 1, 2016	July 1, 2023		1.42	%		43,680		1,285
July 21, 2016	August 1, 2016	August 1, 2023		1.30	%		47,550		1,676
June 5, 2017	May 31, 2017	May 15, 2022		1.90	%		14,700		115
						$	226,244	$	4,577
Liabilities
December 23, 2015	December 23, 2015	January 2, 2026		2.30	%		26,000		(175	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		60,000		(1,423	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(593	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(598	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		40,000		(949	)
						$	176,000	$	(3,738	)

(a)   Receive floating rate index based upon 1 month LIBOR. At March 31, 2019, the 1 month LIBOR was 2.49%.

On January 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities which eliminated the requirement to separately measure and report hedge ineffectiveness. For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness should be recorded in other comprehensive income (OCI). When the amounts recorded in OCI are reclassified to earnings, they should be presented in the same income statement line item as the effect of the hedged item. The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2019 and 2018.

	Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships	2019			2018
Effective portion of derivatives	$	(4,200	)	$	4,826
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$	(454	)	$	133
Ineffective portion of derivatives	$	—		$	(7	)

The total amount of interest expense presented on the consolidated statements of comprehensive (loss) income was $7,153 and $6,467, for the three months ended March 31, 2019 and 2018, respectively. The location of the net gain or loss reclassified into income from accumulated other comprehensive income is reported in interest expense on the consolidated statements of comprehensive (loss) income.   The amount that is expected to be reclassified from accumulated other comprehensive income into income in the next twelve months is $(1,371).

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Distributions

3 Months Ended

Mar. 31, 2019

Distributions [Abstract]

Distributions

NOTE 7 – DISTRIBUTIONS

On March 19, 2019, the Company’s board of directors declared cash distributions payable to stockholders of record as of the close of business on March 31, 2019 in an amount equal to $0.3018 per share, which represents an annualized rate of 6% based on the Estimated Per Share NAV as of December 31, 2018, payable in arrears the following quarter. In 2018, the Company paid quarterly distributions in the amount of $0.335 per share, payable in arrears the following quarter.

The table below presents the distributions paid and declared during the three months ended March 31, 2019 and 2018.

	Three Months Ended March 31,
	2019		2018
Distributions paid	$	11,924	$	4,537
Distributions declared	$	10,741	$	11,927

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Earnings (Loss) per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings (Loss) per Share

NOTE 8 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the “common shares”). Diluted EPS is computed by dividing net income (loss) by the common shares plus common share equivalents. The Company excludes antidilutive restricted shares and units from the calculation of weighted-average shares for diluted EPS.  As a result of a net loss in the three months ended March 31, 2019 and 2018, 2,573 shares and 1,743 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive.  

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 9 – COMMITMENTS AND CONTINGENCIES

The Company may be subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the consolidated financial statements of the Company.

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Equity-Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity-Based Compensation

NOTE 10 – EQUITY-BASED COMPENSATION

Under the Company’s Employee and Director Restricted Share Plan (“RSP”), restricted shares and restricted share units generally vest over a one to three year vesting period from the date of the grant, subject to the specific terms of the grant. In accordance with the RSP, restricted shares and restricted share units were issued to non-employee directors as compensation. Each restricted share and restricted share unit entitles the holder to receive one common share when it vests. Restricted shares and restricted share units are included in common stock outstanding on the date of vesting. The grant-date value of the restricted shares and restricted share units is amortized over the vesting period representing the requisite service period. Compensation expense associated with the restricted shares and restricted share units issued to the non-employee directors was $13 and $11, in the aggregate, for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, the Company had $36 of unrecognized compensation expense related to the unvested restricted shares and restricted share units, in the aggregate. The weighted average remaining period that compensation expense related to unvested restricted shares and restricted share units will be recognized is 1.4 years.

A summary table of the status of the restricted shares and restricted share units is presented below:

	Restricted Shares		Restricted Share Units			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2018		3,224		1,201		$	100	$	100
Granted		—		25			1		—
Vested		—		(5	)		—		—
Converted		—		—			—		—
Forfeited		—		—			—		—
Outstanding at March 31, 2019		3,224		1,221		$	101	$	100

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Segment Reporting

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Reporting

NOTE 11 – SEGMENT REPORTING

The Company has one reportable segment as defined by U.S. GAAP, retail real estate, for the three months ended March 31, 2019 and 2018.

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Transactions with Related Parties

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Transactions With Related Parties

NOTE 12 – TRANSACTIONS WITH RELATED PARTIES

The following table summarizes the Company’s related party transactions for the three months ended March 31, 2019 and 2018. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts.

		Three Months Ended March 31,				Unpaid amounts as of
		2019		2018		March 31, 2019		December 31, 2018
General and administrative reimbursements	(a)	$	338	$	381	$	230	$	216
Acquisition fees	(b)	$	—		9		—		—
Real estate management fees		$	1,086	$	1,285	$	—	$	—
Property operating expenses			284		284		—		—
Construction management fees			49		22		54		6
Leasing fees			89		85		98		37
Total real estate management related costs	(c)	$	1,508	$	1,676	$	152	$	43
Business management fees	(d)	$	2,333	$	2,328	$	2,333	$	2,345

(a) The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses incurred by the Business Manager or its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

(b) Prior to February 11, 2019, the Company was required to pay the Business Manager or its affiliates a fee equal to 1.5% of the “contract purchase price,” as defined, of each asset acquired. The business management agreement was amended and restated to, among other things, remove the obligation to pay acquisition fees and disposition fees payable to the Business Manager by the Company with respect to transactions occurring on or after February 11, 2019. The Business Manager and its related parties continue to be reimbursed for acquisition and transaction related costs of the Business Manager and its related parties relating to the Company’s acquisition activities, regardless of whether the Company acquires the real estate assets. There were no related party acquisition costs or fees incurred during the three months ended March 31, 2019. Related party acquisition costs and fees incurred during the three months ended March 31, 2018 are included in acquisition related costs in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.  

(c) For each property that is managed by Inland Commercial Real Estate Services LLC (the “Real Estate Manager”) (and its predecessor), the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. The Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by the Real Estate Manager or its affiliates, the Company pays the Real Estate Manager a separate leasing fee. Further, in the event that the Company engages its Real Estate Manager to provide construction management services for a property, the Company pays a separate construction management fee.  Leasing fees are included in deferred costs, net and construction management fees are included in building and other improvements in the consolidated balance sheets. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Manager and its affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer of the Real Estate Manager or the Company.  Real estate management fees and reimbursable expenses are included in property operating expenses in the consolidated statements of operations and comprehensive (loss) income.

(d) The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets.” The fee is payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter.  

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 13 – FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

The Company defines fair value based on the price that it believes would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

Level 1 −	Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2 −	Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 −	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes.

Recurring Fair Value Measurements

For assets and liabilities measured at fair value on a recurring basis, the table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of March 31, 2019 and December 31, 2018, respectively.

	Fair Value
	Level 1		Level 2			Level 3		Total
March 31, 2019
Interest rate swap agreements - Other assets	$	—	$	4,577		$	—	$	4,577
Interest rate swap agreements - Other liabilities	$	—	$	(3,738	)	$	—	$	(3,738	)
December 31, 2018
Interest rate swap agreements - Other assets	$	—	$	7,286		$	—	$	7,286
Interest rate swap agreements - Other liabilities	$	—	$	(1,926	)	$	—	$	(1,926	)

The fair value of derivative instruments was estimated based on data observed in the forward yield curve which is widely observed in the marketplace. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty's nonperformance risk in the fair value measurements which utilize Level 3 inputs, such as estimates of current credit spreads. The Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative interest rate swap agreements and therefore has classified these in Level 2 of the hierarchy.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

NOTE 14 – SUBSEQUENT EVENTS

The Company paid distributions of $10,741 and issued 240,331 shares through the DRP on April 1, 2019.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

General

General

The consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

Certain amounts in the prior period consolidated financial statements have been reclassified to conform with the current year presentation.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. Among other things, the guidance eliminated the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. As ASU 2017-12 was effective for fiscal years beginning after December 15, 2018, the Company adopted the ASU on January 1, 2019 with a modified retrospective transition. For cash flow hedges existing at January 1, 2019, the Company eliminated the separate measurement of ineffectiveness by means of a cumulative reversal of recognized hedge ineffectiveness with a credit to the opening balance of accumulated distributions and net loss and a debit to accumulated other comprehensive income of $134 on its consolidated balance sheet and consolidated statement of equity.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) which amends the guidance in ASC Topic 840, Leases. The Company adopted the lease standard effective January 1, 2019. As a lessor, the Company’s recognition of rental income remained mainly consistent with previous guidance. As a result of the adoption of ASC 842, the Company includes both billed and accrued charges in its quarterly evaluation of the collectability of a tenant’s receivable balance. Prior to the adoption of ASC 842, uncollectible tenant revenues were recorded as bad debt expense in property operating expenses on our consolidated statement of operations and comprehensive loss. For tenant receivables that the Company determines to be uncollectible, the Company now records an offset for uncollectible tenant revenues directly to rental income. Upon adoption of ASC 842 on January 1, 2019, a cumulative-effect adjustment of $24 was recognized for uncollectible tenant revenues as a result of this change. The standard’s changes related to capitalized initial direct costs did not impact the Company’s accounting for such costs, because historically, the Company capitalized initial direct costs (commissions) that are still considered capitalizable under the new standard.

As part of its adoption of the lease standard, the Company has elected and qualifies to utilize the practical expedient in ASU No. 2018-11, Targeted Improvements, Leases (Topic 842) issued in July 2018, which allows, by class of underlying assets, to not separate non-lease components from the related lease components and, instead, to account for those components as a single lease. This practical expedient for lessors is limited to circumstances in which the non-lease component or components would be accounted for under the new revenue guidance and both (1) the timing and pattern of transfer are the same for the non-lease component(s) and associated lease component and (2) the lease component, if accounted for separately, would be classified as an operating lease.

The Company also elected the package of practical expedients in ASU No. 2018-11, which permitted the Company to adopt the new leases standard under a transition method whereby it initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Therefore, the Company adopted ASU No. 2016-02 on its effective date without restating comparative periods and utilized the practical expedients available in the amendment as part of its adoption. The package of practical expedients included relief from re-assessing a lease using the standard’s new definition of a lease, relief from re-assessing the classification of a lease and allowing previously capitalized initial direct costs (see above) to continue to be amortized. The adoption of the package of practical expedients, as a lessor, did not require the Company to recognize a cumulative effect adjustment.

For lessees, ASU No. 2016-02 establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The Company is the lessee of a ground lease. The Company has elected the practical expedient that, for leases that commenced before the effective date, the lessee need not reassess whether the contract is a lease nor reassess lease classification for existing leases. The lease liability for the ground lease was based on the present value of the ground lease’s future lease payments using an interest rate which it considers reasonable and within the range of the Company’s incremental borrowing rate. At January 1, 2019, the Company recorded a lease liability of $23,377 and a ROU asset of $15,963 on its consolidated balance sheet. Rental expense for lease payments related to the operating lease will continue to be recognized on a straight-line basis over the lease term.

Restricted Cash

Restricted Cash

Amounts included in restricted cash represent those required to be set aside by lenders for real estate taxes, insurance, capital expenditures and tenant improvements on our existing properties. These amounts also include post close escrows for tenant improvements, leasing commissions, master lease, general repairs and maintenance, and are classified as restricted cash on the Company’s consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Company’s consolidated balance sheets to such amounts shown in the Company’s consolidated statements of cash flows:

	March 31,
	2019		2018
Cash and cash equivalents	$	13,023	$	21,506
Restricted cash		1,001		4,648
Total cash, cash equivalents, and restricted cash	$	14,024	$	26,154

Income Tax

Income Tax

During the year ended December 31, 2018, the Company recorded an impairment charge of $15,405 related to its investment in Mainstreet Texas Development Fund, LLC, a joint venture formed to develop three transitional care/rapid recovery centers (“Mainstreet JV”). As a result, the Company will likely recognize either a capital or net operating loss or a combination thereof, for income tax purposes, from this venture in the future. The Company’s investment in Mainstreet JV is held through a taxable REIT subsidiary. Based on an effective tax rate of 28.51%, which is calculated by combining a 21% Federal tax rate and an IL tax rate of 7.51% (9.5% state rate net of the Federal benefit), the deferred tax benefit related to the impairment is approximately $4,400. Since the taxable REIT subsidiary does not currently conduct any activities outside the investment in Mainstreet JV, management does not believe it is more likely than not that the taxable REIT subsidiary will be able to utilize these losses in future tax periods. As a result, management recorded a full valuation allowance of $4,400 to account for this uncertainty.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Company’s consolidated balance sheets to such amounts shown in the Company’s consolidated statements of cash flows:

	March 31,
	2019		2018
Cash and cash equivalents	$	13,023	$	21,506
Restricted cash		1,001		4,648
Total cash, cash equivalents, and restricted cash	$	14,024	$	26,154

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Summary of Rental Income Related to Operating Leases

Rental income related to the Company's operating leases is comprised of the following:

	Three Months Ended March 31, 2019
Rental income - fixed payments	$	25,495
Rental income - variable payments (a)		6,719
Amortization of acquired market leases, net	208
Rental income	$	32,422

(a) Primarily includes tenant recovery income for real estate taxes, common area maintenance and insurance.

Schedule of Future Base Rent Payments to be Received Under Operating Leases

The future base rent payments to be received under operating leases including ground leases as of March 31, 2019 for the years indicated, assuming no expiring leases are renewed, are as follows:

	Lease Payments
2019 (remainder of year)	$	69,772
2020		87,211
2021		81,620
2022		71,831
2023		60,319
Thereafter		196,840
Total	$	567,593

Summary of Future Ground Lease Payments

Lease payments for the ground lease as of March 31, 2019 for each of the five succeeding years and thereafter is as follows:  

	Lease Payments
2019 (remainder of year)	$	855
2020		1,140
2021		1,140
2022		1,202
2023		1,264
Thereafter		88,376
Total	$	93,977

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Acquired Intangible Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets and Liabilities

The following table summarizes the Company’s identified intangible assets and liabilities as of March 31, 2019 and December 31, 2018: 

	March 31, 2019			December 31, 2018
Intangible assets:
Acquired in-place lease value	$	165,182		$	165,182
Acquired above market lease value		45,824			45,824
Accumulated amortization		(101,394	)		(95,649	)
Acquired lease intangibles, net	$	109,612		$	115,357
Intangible liabilities:
Acquired below market lease value	$	71,551		$	71,551
Acquired above market ground lease		—			5,169
Accumulated amortization		(20,066	)		(19,258	)
Acquired below market lease intangibles, net	$	51,485		$	57,462

Schedule of Amortization of Acquired In Place Lease Value, Above Market Ground Lease, Above and Below Market Lease Values

Amortization pertaining to acquired in-place lease value, above market ground lease, above market lease value and below market lease value is summarized below:

	Three Months Ended March 31,
Amortization recorded as amortization expense:	2019			2018
Acquired in-place lease value	$	4,841		$	5,071
Amortization recorded as a reduction to property operating expense:
Acquired above market ground lease	$	—		$	23
Amortization recorded as a (reduction) increase to rental income:
Acquired above market leases	$	(904	)	$	(1,030	)
Acquired below market leases		1,112			1,135
Net rental income increase	$	208		$	105

Schedule of Estimated Amortization of Intangible Lease Assets and Liabilities

Estimated amortization of the respective intangible lease assets and liabilities as of March 31, 2019 for each of the five succeeding years and thereafter is as follows:  

	Acquired In-Place Leases		Above Market Leases		Below Market Leases
2019 (remainder of year)	$	12,420	$	2,526	$	3,208
2020		13,801		3,057		4,070
2021		11,354		2,988		3,889
2022		8,714		2,684		3,630
2023		7,458		2,489		3,347
Thereafter		26,301		15,820		33,341
Total	$	80,048	$	29,564	$	51,485

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Debt and Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Mortgages and Credit Facilities Payable

As of March 31, 2019 and December 31, 2018, the Company had the following mortgages and credit facility payable:

	March 31, 2019						December 31, 2018
Type of Debt	Principal Amount			Weighted Average Interest Rate			Principal Amount			Weighted Average Interest Rate
Fixed rate mortgages payable	$	171,592			4.25	%	$	171,646			4.25	%
Variable rate mortgages payable with swap agreements		252,244			3.33	%		252,244			3.33	%
Variable rate mortgages payable		684			4.09	%		684			3.95	%
Mortgages payable	$	424,520			3.71	%	$	424,574			3.71	%
Credit facility payable		284,523			4.22	%		284,523			4.22	%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$	709,043			3.91	%	$	709,097			3.91	%
Add: Unamortized mortgage premiums		1,525						1,683
Less: Unamortized debt issuance costs		(4,588	)					(4,896	)
Total debt	$	705,980					$	705,884

Schedule of Principal Payments and Maturities of Company's Debt

As of March 31, 2019, scheduled principal payments and maturities on the Company’s debt were as follows:

	March 31, 2019
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgage Loans		Maturity of Credit Facility		Total
2019 (remainder of the year)	$	178	$	7,447	$	—	$	7,625
2020		897		—		—		897
2021		1,531		82,740		—		84,271
2022		615		101,537		134,523		236,675
2023		326		91,230		150,000		241,556
Thereafter		636		137,383		—		138,019
Total	$	4,183	$	420,337	$	284,523	$	709,043

Summary of Interest Rate Swap Contracts Outstanding

The following table summarizes the Company’s interest rate swap contracts outstanding as of March 31, 2019.

Date Entered	Effective Date	Maturity Date	Pay Fixed Rate (a)			Notional Amount		Fair Value at March 31, 2019
Assets
February 11, 2015	March 2, 2015	March 1, 2022		2.02	%		6,114		26
April 7, 2015	April 7, 2015	April 7, 2022		1.74	%		49,400		608
September 17, 2015	September 17, 2015	September 17, 2022		1.90	%		13,700		118
October 2, 2015	November 1, 2015	November 1, 2022		1.79	%		13,100		163
January 25, 2016	February 1, 2016	February 1, 2021		1.40	%		38,000		586
June 7, 2016	July 1, 2016	July 1, 2023		1.42	%		43,680		1,285
July 21, 2016	August 1, 2016	August 1, 2023		1.30	%		47,550		1,676
June 5, 2017	May 31, 2017	May 15, 2022		1.90	%		14,700		115
						$	226,244	$	4,577
Liabilities
December 23, 2015	December 23, 2015	January 2, 2026		2.30	%		26,000		(175	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		60,000		(1,423	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(593	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(598	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		40,000		(949	)
						$	176,000	$	(3,738	)

(a)   Receive floating rate index based upon 1 month LIBOR. At March 31, 2019, the 1 month LIBOR was 2.49%.

Schedule of Derivative Financial Instruments on Consolidated Statements of Operations and Other Comprehensive (Loss) Income

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2019 and 2018.

	Three Months Ended March 31,
Derivatives in Cash Flow Hedging Relationships	2019			2018
Effective portion of derivatives	$	(4,200	)	$	4,826
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$	(454	)	$	133
Ineffective portion of derivatives	$	—		$	(7	)

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Distributions (Tables)

3 Months Ended

Mar. 31, 2019

Distributions [Abstract]

Schedule of Distributions Paid and Declared

The table below presents the distributions paid and declared during the three months ended March 31, 2019 and 2018.

	Three Months Ended March 31,
	2019		2018
Distributions paid	$	11,924	$	4,537
Distributions declared	$	10,741	$	11,927

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Equity-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Restricted Shares and Restricted Share Units

A summary table of the status of the restricted shares and restricted share units is presented below:

	Restricted Shares		Restricted Share Units			Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2018		3,224		1,201		$	100	$	100
Granted		—		25			1		—
Vested		—		(5	)		—		—
Converted		—		—			—		—
Forfeited		—		—			—		—
Outstanding at March 31, 2019		3,224		1,221		$	101	$	100

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Transactions with Related Parties (Tables)

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following table summarizes the Company’s related party transactions for the three months ended March 31, 2019 and 2018. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts.

		Three Months Ended March 31,				Unpaid amounts as of
		2019		2018		March 31, 2019		December 31, 2018
General and administrative reimbursements	(a)	$	338	$	381	$	230	$	216
Acquisition fees	(b)	$	—		9		—		—
Real estate management fees		$	1,086	$	1,285	$	—	$	—
Property operating expenses			284		284		—		—
Construction management fees			49		22		54		6
Leasing fees			89		85		98		37
Total real estate management related costs	(c)	$	1,508	$	1,676	$	152	$	43
Business management fees	(d)	$	2,333	$	2,328	$	2,333	$	2,345

(a) The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses incurred by the Business Manager or its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

(b) Prior to February 11, 2019, the Company was required to pay the Business Manager or its affiliates a fee equal to 1.5% of the “contract purchase price,” as defined, of each asset acquired. The business management agreement was amended and restated to, among other things, remove the obligation to pay acquisition fees and disposition fees payable to the Business Manager by the Company with respect to transactions occurring on or after February 11, 2019. The Business Manager and its related parties continue to be reimbursed for acquisition and transaction related costs of the Business Manager and its related parties relating to the Company’s acquisition activities, regardless of whether the Company acquires the real estate assets. There were no related party acquisition costs or fees incurred during the three months ended March 31, 2019. Related party acquisition costs and fees incurred during the three months ended March 31, 2018 are included in acquisition related costs in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.  

(c) For each property that is managed by Inland Commercial Real Estate Services LLC (the “Real Estate Manager”) (and its predecessor), the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. The Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by the Real Estate Manager or its affiliates, the Company pays the Real Estate Manager a separate leasing fee. Further, in the event that the Company engages its Real Estate Manager to provide construction management services for a property, the Company pays a separate construction management fee.  Leasing fees are included in deferred costs, net and construction management fees are included in building and other improvements in the consolidated balance sheets. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Manager and its affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer of the Real Estate Manager or the Company.  Real estate management fees and reimbursable expenses are included in property operating expenses in the consolidated statements of operations and comprehensive (loss) income.

(d) The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets.” The fee is payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter.  

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Cash Flow Hedges and Classification on Consolidated Balance Sheets

For assets and liabilities measured at fair value on a recurring basis, the table below presents the fair value of the Company’s cash flow hedges as well as their classification on the consolidated balance sheets as of March 31, 2019 and December 31, 2018, respectively.

	Fair Value
	Level 1		Level 2			Level 3		Total
March 31, 2019
Interest rate swap agreements - Other assets	$	—	$	4,577		$	—	$	4,577
Interest rate swap agreements - Other liabilities	$	—	$	(3,738	)	$	—	$	(3,738	)
December 31, 2018
Interest rate swap agreements - Other assets	$	—	$	7,286		$	—	$	7,286
Interest rate swap agreements - Other liabilities	$	—	$	(1,926	)	$	—	$	(1,926	)

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Organization (Narrative) (Details)	3 Months Ended
	Mar. 31, 2019 ft² Property State	Mar. 11, 2019
Organization [Line Items]
Number of retail properties owned | Property	59
Square footage of real estate properties owned | ft²	6,870,124
Number of states in which company owns real estate properties | State	24
Weighted average physical occupancy rate of property portfolio	94.00%
Weighted average economic occupancy rate of property portfolio	94.40%
Share Repurchase Program [Member]
Organization [Line Items]
Percentage of share price on repurchase of shares		80.00%
Grocery-Anchored Properties [Member]
Organization [Line Items]
Percentage of grocery-anchored property acquired	100.00%

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Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2018	Mar. 31, 2019
Acquired Finite Lived Intangible Assets [Line Items]
Operating lease liability			$ 23,455
Operating lease right-of-use asset			$ 15,840
Mainstreet Texas Development Fund, LLC ("Mainstreet JV") [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Provision for asset impairment		$ 15,405
Effective income tax rate		28.51%
Federal tax rate		21.00%
Deferred tax benefit related to impairment		$ 4,400
Full valuation allowance		$ 4,400
Mainstreet Texas Development Fund, LLC ("Mainstreet JV") [Member] | ILLINOIS [Member]
Acquired Finite Lived Intangible Assets [Line Items]
State rate		9.50%
IL tax rate		7.51%
ASU 2017-12 [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Other Comprehensive Income (Loss), Net of Tax	$ 134
ASU 2016-02 [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Cumulative- effect adjustment to retained earnings	24
Operating lease liability	23,377
Operating lease right-of-use asset	$ 15,963

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Summary of Significant Accounting Policies (Reconciliation of Cash, Cash Equivalents and Restricted Cash) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Cash and cash equivalents	$ 13,023	$ 15,239	$ 21,506
Restricted cash	1,001	1,001	4,648
Total cash, cash equivalents, and restricted cash	$ 14,024	$ 16,240	$ 26,154	$ 16,844

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Equity (Narrative) (Details) - USD ($)		3 Months Ended
	Oct. 16, 2015	Mar. 31, 2019	Mar. 31, 2018	Feb. 11, 2019	Dec. 31, 2018
Equity [Line Items]
Common stock, shares issued	33,534,022	35,447,385			35,343,256
Proceeds from offering	$ 834,399
Common stock, shares outstanding		35,447,385			35,343,256
Distribution reinvestment plan, shares		4,643,680
Shares repurchased through the share repurchase program		2,731,757
Distribution reinvested		$ 5,463,000	$ 2,254,000
Stock repurchase program, amount		2,402,000	5,782,000
Other liabilities		$ 10,125,000			$ 16,268,000
Amended and Restated Share Repurchase Program [Member]
Equity [Line Items]
Stock repurchase program, authorized amount				$ 25,000
Percentage of share price on repurchase of shares				80.00%
Repurchase of Shares Owned for One Year [Member]
Equity [Line Items]
Percentage of share price on repurchase of shares		92.50%
Repurchase of Shares Owned for Four Years [Member]
Equity [Line Items]
Percentage of share price on repurchase of shares		100.00%
Repurchase of Shares Owned upon Death and Qualifying Disability [Member]
Equity [Line Items]
Percentage of share price on repurchase of shares		100.00%
Stock Repurchase Program [Member]
Equity [Line Items]
Other liabilities		$ 2,402,000			$ 5,463,000
Minimum [Member]
Equity [Line Items]
Stock repurchase program, to be held		1 year
Maximum [Member] | Amended and Restated Share Repurchase Program [Member]
Equity [Line Items]
Stock repurchase program shares issued in percentage		5.00%
DRP [Member]
Equity [Line Items]
Distribution reinvested		$ 5,463,000	$ 2,254,000

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Leases - Additional Information (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) OperatingLease RenewalOption	Jan. 01, 2019 USD ($)	Jul. 01, 2007 GroundLease
Operating Leased Assets [Line Items]
Number of retail operating leases | OperatingLease	700
Number of ground leases | GroundLease			1
Lessee, operating lease, option to extend	October 2015 and extends through June 30, 2037 with six 5-year renewal options
Number of lessee renewal options | RenewalOption	6
Lessee, operating lease, renewal term	5 years
Operating lease liability	$ 23,455
Operating lease right-of-use asset, net	$ 15,840
Interest rate		6.32%
ASU 2016-02 [Member]
Operating Leased Assets [Line Items]
Operating lease liability		$ 23,377
Operating lease right-of-use asset, net		$ 15,963
Minimum [Member]
Operating Leased Assets [Line Items]
Lessor, operating leases, term of contract	1 year
Maximum [Member]
Operating Leased Assets [Line Items]
Lessor, operating leases, term of contract	19 years

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Leases - Summary of Rental Income Related to Operating Leases (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018
Operating Leases Lease Income [Abstract]
Rental income - fixed payments		$ 25,495
Rental income - variable payments	[1]	6,719
Amortization of acquired market leases, net		208	$ 128
Rental income		$ 32,422

[1] Primarily includes tenant recovery income for real estate taxes, common area maintenance and insurance.

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Leases - Schedule of Future Base Rent Payments to be Received Under Operating Leases (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
2019 (remainder of year)	$ 69,772
2020	87,211
2021	81,620
2022	71,831
2023	60,319
Thereafter	196,840
Total	$ 567,593

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Leases - Summary of Future Ground Lease Payments (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Operating Leases Future Minimum Payments Due [Abstract]
2019 (remainder of year)	$ 855
2020	1,140
2021	1,140
2022	1,202
2023	1,264
Thereafter	88,376
Total	$ 93,977

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Acquired Intangible Assets and Liabilities (Schedule of Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Intangible assets:
Accumulated amortization	$ (101,394)	$ (95,649)
Acquired lease intangibles, net	109,612	115,357
Intangible liabilities:
Acquired below market lease value	71,551	71,551
Acquired above market ground lease		5,169
Accumulated amortization	(20,066)	(19,258)
Acquired below market lease intangibles, net	51,485	57,462
Acquired in-place lease value [Member]
Intangible assets:
Acquired intangible assets	165,182	165,182
Acquired lease intangibles, net	80,048
Acquired above market lease value [Member]
Intangible assets:
Acquired intangible assets	45,824	$ 45,824
Acquired lease intangibles, net	$ 29,564

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Acquired Intangible Assets and Liabilities - Narrative (Details)	3 Months Ended
	Mar. 31, 2019
Acquired in-place lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Intangible liabilities, weighted average amortization period	10 years
Acquired above market lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Intangible liabilities, weighted average amortization period	14 years
Acquired below market lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Intangible liabilities, weighted average amortization period	19 years

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Acquired Intangible Assets and Liabilities (Schedule of Amortization of Acquired In Place Lease Value, Above Market Ground Lease, Above and Below Market Lease Values) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a (reduction) increase to rental income	$ 208	$ 105
Acquired in-place lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as amortization expense	4,841	5,071
Acquired above market ground lease [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a reduction to property operating expense		23
Acquired above market lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a (reduction) increase to rental income	(904)	(1,030)
Acquired below market lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a (reduction) increase to rental income	$ 1,112	$ 1,135

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Acquired Intangible Assets and Liabilities (Schedule of Estimated Amortization of Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Future amortization for acquired in-place and above market lease assets:
Acquired lease intangibles, net	$ 109,612	$ 115,357
Future amortization for below market lease liabilities:
2019 (remainder of year)	3,208
2020	4,070
2021	3,889
2022	3,630
2023	3,347
Thereafter	33,341
Total	51,485
Acquired in-place lease value [Member]
Future amortization for acquired in-place and above market lease assets:
2019 (remainder of year)	12,420
2020	13,801
2021	11,354
2022	8,714
2023	7,458
Thereafter	26,301
Acquired lease intangibles, net	80,048
Above Market Leases [Member]
Future amortization for acquired in-place and above market lease assets:
2019 (remainder of year)	2,526
2020	3,057
2021	2,988
2022	2,684
2023	2,489
Thereafter	15,820
Acquired lease intangibles, net	$ 29,564

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Debt and Derivative Instruments (Schedule of Mortgages and Credit Facility Payable) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 424,520	$ 424,574
Credit facility payable	284,523	284,523
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	709,043	709,097
Add: Unamortized mortgage premiums	1,525	1,683
Less: Unamortized debt issuance costs	(4,588)	(4,896)
Total debt	$ 705,980	$ 705,884
Mortgages Payable, Weighted Average Interest Rate	3.71%	3.71%
Credit Facilities Payable, Weighted Average Interest Rate	4.22%	4.22%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps, Weighted Average Interest Rate	3.91%	3.91%
Fixed rate mortgages payable [Member]
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 171,592	$ 171,646
Mortgages Payable, Weighted Average Interest Rate	4.25%	4.25%
Variable rate mortgages payable with swap agreements [Member]
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 252,244	$ 252,244
Mortgages Payable, Weighted Average Interest Rate	3.33%	3.33%
Variable rate mortgages payable [Member]
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 684	$ 684
Mortgages Payable, Weighted Average Interest Rate	4.09%	3.95%

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Debt and Derivative Instruments (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Property	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Carrying value of debt	$ 709,043		$ 709,097
Estimated fair value of debt	711,066		709,737
Outstanding line of credit	$ 284,523		$ 284,523
Number of properties pledged as collateral | Property	28
Interest expense	$ 7,153	$ 6,467
Amount expected to be reclassified from accumulated other comprehensive income into income in the next twelve months	$ (1,371)
Mortgages Payable [Member]
Debt Instrument [Line Items]
Weighted average years to maturity	4 years 3 months 18 days
Mortgages payable, covenant compliance	the Company was current on all of the payments and in compliance with all financial covenants.
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Carrying value of debt	$ 284,523
Outstanding line of credit	$ 134,523
Credit facility, interest rate	4.14%
Credit facility, maturity date	Aug. 01, 2022
Line of credit facility, expiration date, extension period	1 year
Credit facility available for borrowing	$ 65,477
Term Loan [Member]
Debt Instrument [Line Items]
Outstanding line of credit	$ 150,000
Credit facility, interest rate	4.29%
Credit facility, maturity date	Aug. 01, 2023

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Debt and Derivative Instruments (Schedule of Principal Payments and Maturities of Company's Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
2019 (remainder of the year)	$ 7,625
2020	897
2021	84,271
2022	236,675
2023	241,556
Thereafter	138,019
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	709,043	$ 709,097
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
2022	134,523
2023	150,000
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	284,523
Scheduled Principal Payments [Member]
Debt Instrument [Line Items]
2019 (remainder of the year)	178
2020	897
2021	1,531
2022	615
2023	326
Thereafter	636
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	4,183
Maturities of Mortgage Loans [Member]
Debt Instrument [Line Items]
2019 (remainder of the year)	7,447
2021	82,740
2022	101,537
2023	91,230
Thereafter	137,383
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$ 420,337

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Debt and Derivative Instruments (Summary of Interest Rate Swap Contracts Outstanding) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Derivative [Line Items]
Derivative instrument, notional amount	$ 226,244
Derivative instrument, notional amount	176,000
Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	4,577
Fair value of derivative liabilities measured on recurring basis	$ (3,738)
Interest Rate Swap One [Member]
Derivative [Line Items]
Derivative instrument, date entered	Feb. 11, 2015
Derivative instrument, effective date	Mar. 02, 2015
Derivative instrument, maturity date	Mar. 01, 2022
Derivative instrument, pay fixed interest rate	2.02%	[1]
Derivative instrument, notional amount	$ 6,114
Interest Rate Swap One [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 26
Interest Rate Swap Two [Member]
Derivative [Line Items]
Derivative instrument, date entered	Apr. 07, 2015
Derivative instrument, effective date	Apr. 07, 2015
Derivative instrument, maturity date	Apr. 07, 2022
Derivative instrument, pay fixed interest rate	1.74%	[1]
Derivative instrument, notional amount	$ 49,400
Interest Rate Swap Two [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 608
Interest Rate Swap Three [Member]
Derivative [Line Items]
Derivative instrument, date entered	Sep. 17, 2015
Derivative instrument, effective date	Sep. 17, 2015
Derivative instrument, maturity date	Sep. 17, 2022
Derivative instrument, pay fixed interest rate	1.90%	[1]
Derivative instrument, notional amount	$ 13,700
Interest Rate Swap Three [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 118
Interest Rate Swap Four [Member]
Derivative [Line Items]
Derivative instrument, date entered	Oct. 02, 2015
Derivative instrument, effective date	Nov. 01, 2015
Derivative instrument, maturity date	Nov. 01, 2022
Derivative instrument, pay fixed interest rate	1.79%	[1]
Derivative instrument, notional amount	$ 13,100
Interest Rate Swap Four [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 163
Interest Rate Swap Five [Member]
Derivative [Line Items]
Derivative instrument, date entered	Jan. 25, 2016
Derivative instrument, effective date	Feb. 01, 2016
Derivative instrument, maturity date	Feb. 01, 2021
Derivative instrument, pay fixed interest rate	1.40%	[1]
Derivative instrument, notional amount	$ 38,000
Interest Rate Swap Five [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 586
Interest Rate Swap Six [Member]
Derivative [Line Items]
Derivative instrument, date entered	Jun. 07, 2016
Derivative instrument, effective date	Jul. 01, 2016
Derivative instrument, maturity date	Jul. 01, 2023
Derivative instrument, pay fixed interest rate	1.42%	[1]
Derivative instrument, notional amount	$ 43,680
Interest Rate Swap Six [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 1,285
Interest Rate Swap Seven [Member]
Derivative [Line Items]
Derivative instrument, date entered	Jul. 21, 2016
Derivative instrument, effective date	Aug. 01, 2016
Derivative instrument, maturity date	Aug. 01, 2023
Derivative instrument, pay fixed interest rate	1.30%	[1]
Derivative instrument, notional amount	$ 47,550
Interest Rate Swap Seven [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 1,676
Interest Rate Swap Eight [Member]
Derivative [Line Items]
Derivative instrument, date entered	Jun. 05, 2017
Derivative instrument, effective date	May 31, 2017
Derivative instrument, maturity date	May 15, 2022
Derivative instrument, pay fixed interest rate	1.90%	[1]
Derivative instrument, notional amount	$ 14,700
Interest Rate Swap Eight [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative assets measured on recurring basis	$ 115
Interest Rate Swap Nine [Member]
Derivative [Line Items]
Derivative instrument, date entered	Dec. 23, 2015
Derivative instrument, effective date	Dec. 23, 2015
Derivative instrument, maturity date	Jan. 02, 2026
Derivative instrument, pay fixed interest rate	2.30%	[1]
Derivative instrument, notional amount	$ 26,000
Interest Rate Swap Nine [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (175)
Interest Rate Swap Ten [Member]
Derivative [Line Items]
Derivative instrument, date entered	Aug. 23, 2018
Derivative instrument, effective date	Sep. 04, 2018
Derivative instrument, maturity date	Aug. 01, 2023
Derivative instrument, pay fixed interest rate	2.73%	[1]
Derivative instrument, notional amount	$ 60,000
Interest Rate Swap Ten [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (1,423)
Interest Rate Swap Eleven [Member]
Derivative [Line Items]
Derivative instrument, date entered	Aug. 23, 2018
Derivative instrument, effective date	Sep. 04, 2018
Derivative instrument, maturity date	Aug. 01, 2023
Derivative instrument, pay fixed interest rate	2.74%	[1]
Derivative instrument, notional amount	$ 25,000
Interest Rate Swap Eleven [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (593)
Interest Rate Swap Twelve [Member]
Derivative [Line Items]
Derivative instrument, date entered	Aug. 23, 2018
Derivative instrument, effective date	Sep. 04, 2018
Derivative instrument, maturity date	Aug. 01, 2023
Derivative instrument, pay fixed interest rate	2.74%	[1]
Derivative instrument, notional amount	$ 25,000
Interest Rate Swap Twelve [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (598)
Interest Rate Swap Thirteen [Member]
Derivative [Line Items]
Derivative instrument, date entered	Aug. 23, 2018
Derivative instrument, effective date	Sep. 04, 2018
Derivative instrument, maturity date	Aug. 01, 2023
Derivative instrument, pay fixed interest rate	2.73%	[1]
Derivative instrument, notional amount	$ 40,000
Interest Rate Swap Thirteen [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (949)

[1] Receive floating rate index based upon 1 month LIBOR. At March 31, 2019, the 1 month LIBOR was 2.49%.

XML

Debt and Derivative Instruments (Summary of Interest Rate Swap Contracts Outstanding) (Parenthetical) (Details)	3 Months Ended
	Mar. 31, 2019
Derivative [Line Items]
Derivative instrument, receive floating rate index	1 month LIBOR
LIBOR [Member]
Derivative [Line Items]
One month floating rate	2.49%

XML

Debt and Derivative Instruments (Derivatives on Consolidated Statements of Operations and Other Comprehensive (Loss) Income (Details) - Designated as Hedging Instrument [Member] - Cash Flow Hedging [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Effective portion of derivatives	$ (4,200)	$ 4,826
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$ (454)	133
Ineffective portion of derivatives		$ (7)

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Distributions (Narrative) (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018
Distributions [Abstract]
Amount per share of distributions	$ 0.3018	$ 0.335	$ 0.335
Annualized rate on Estimated Per Share NAV	6.00%

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Distributions (Schedule of Distributions Paid and Declared) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Distributions [Abstract]
Distributions paid	$ 11,924	$ 4,537
Distributions declared	$ 10,741	$ 11,927

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Earnings (Loss) per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Additional shares excluded from the computation of diluted earnings per share	2,573	1,743

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Equity-Based Compensation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation expense of unvested share-based awards	$ 36
Weighted average remaining period unrecognized compensation expense related to non-vested	1 year 4 months 24 days
Common stock shares issued upon vesting	1
Restricted Stock [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation vesting period	1 year
Restricted Stock [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation vesting period	3 years
Restricted Stock Units (RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation expense of unvested share-based awards	$ 36
Weighted average remaining period unrecognized compensation expense related to non-vested	1 year 4 months 24 days
Common stock shares issued upon vesting	1
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation vesting period	1 year
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation vesting period	3 years
Non-Employee Directors [Member] | Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 13	$ 11
Non-Employee Directors [Member] | Restricted Stock Units (RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 13	$ 11

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Equity-Based Compensation (Summary of the Restricted Shares and Restricted Share Units) (Details)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, Weighted Average Grant Date Fair Value | $ / shares	$ 100
Granted, Weighted Average Grant Date Fair Value | $ / shares	1
Outstanding, Weighted Average Grant Date Fair Value | $ / shares	101
Outstanding, Aggregate Intrinsic Value | $ / shares	100
Outstanding, Aggregate Intrinsic Value | $ / shares	$ 100
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, Shares	3,224
Outstanding, Shares	3,224
Restricted Stock Units (RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, Shares	1,201
Granted, Shares	25
Vested, Shares	(5)
Outstanding, Shares	1,221

XML

Segment Reporting (Details) - Segment	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting [Abstract]
Number of reportable segments	1	1

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Transactions with Related Parties (Schedule of Related Party Transactions) (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Related Party Transaction [Line Items]
Real estate management related costs with related party	[1]	$ 1,508	$ 1,676
Due to related parties		2,715		$ 2,604
General and Administrative Reimbursements [Member]
Related Party Transaction [Line Items]
General and administrative expenses incurred with related party	[2]	338	381
Due to related parties	[2]	230		216
Acquisition Fees [Member]
Related Party Transaction [Line Items]
Expenses incurred with related party	[3]		9
Real Estate Management Fees [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		1,086	1,285
Property Operating Expenses [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		284	284
Construction Management Fees [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		49	22
Due to related parties		54		6
Leasing fees [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		89	85
Due to related parties		98		37
Real Estate Management Costs [Member]
Related Party Transaction [Line Items]
Due to related parties	[1]	152		43
Business Management Fee [Member]
Related Party Transaction [Line Items]
Expenses incurred with related party	[4]	2,333	$ 2,328
Due to related parties	[4]	$ 2,333		$ 2,345

[1] For each property that is managed by Inland Commercial Real Estate Services LLC (the “Real Estate Manager”) (and its predecessor), the Company pays a monthly real estate management fee of up to 1.9% of the gross income from any single-tenant, net-leased property, and up to 3.9% of the gross income from any other property type. The Real Estate Manager determines, in its sole discretion, the amount of the fee with respect to a particular property, subject to the limitations. For each property that is managed directly by the Real Estate Manager or its affiliates, the Company pays the Real Estate Manager a separate leasing fee. Further, in the event that the Company engages its Real Estate Manager to provide construction management services for a property, the Company pays a separate construction management fee. Leasing fees are included in deferred costs, net and construction management fees are included in building and other improvements in the consolidated balance sheets. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses and benefits of persons performing services for the Real Estate Manager and its affiliates except for the salaries, bonuses and benefits of persons who also serve as an executive officer of the Real Estate Manager or the Company. Real estate management fees and reimbursable expenses are included in property operating expenses in the consolidated statements of operations and comprehensive (loss) income.

[2] The Business Manager and its related parties are entitled to reimbursement for certain general and administrative expenses incurred by the Business Manager or its related parties relating to the Company’s administration. Such costs are included in general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

[3] Prior to February 11, 2019, the Company was required to pay the Business Manager or its affiliates a fee equal to 1.5% of the “contract purchase price,” as defined, of each asset acquired. The business management agreement was amended and restated to, among other things, remove the obligation to pay acquisition fees and disposition fees payable to the Business Manager by the Company with respect to transactions occurring on or after February 11, 2019. The Business Manager and its related parties continue to be reimbursed for acquisition and transaction related costs of the Business Manager and its related parties relating to the Company’s acquisition activities, regardless of whether the Company acquires the real estate assets. There were no related party acquisition costs or fees incurred during the three months ended March 31, 2019. Related party acquisition costs and fees incurred during the three months ended March 31, 2018 are included in acquisition related costs in the consolidated statements of operations and comprehensive (loss) income. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

[4] The Company pays the Business Manager an annual business management fee equal to 0.65% of its “average invested assets.” The fee is payable quarterly in an amount equal to 0.1625% of its average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities and consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter.

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Transactions with Related Parties (Narrative) (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
Related Party Transaction [Line Items]
Asset acquisition fee to contract purchase price, percentage	1.50%
Annual business management fee to its average invested assets, percentage	0.65%
Quarterly payable business management fee to its average invested assets, percentage	0.1625%
Acquisition Related Costs and Fee [Member]
Related Party Transaction [Line Items]
Total acquisition cost and fees	$ 0
Monthly Real Estate Management Fee Of Single Tenant Property [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Property management fee, percentage	1.90%
Monthly Real Estate Management Fee Of Any Other Property [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Property management fee, percentage	3.90%

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Fair Value Measurements (Schedule of Cash Flow Hedges and Classification on Consolidated Balance Sheets) (Details) - Recurring [Member] - Interest Rate Swap Agreements [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Other Assets [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other assets	$ 4,577	$ 7,286
Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other liabilities	(3,738)	(1,926)
Level 2 [Member] | Other Assets [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other assets	4,577	7,286
Level 2 [Member] | Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other liabilities	$ (3,738)	$ (1,926)

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Subsequent Events (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended
	Apr. 01, 2019	Mar. 31, 2019	Mar. 31, 2018
Subsequent Event [Line Items]
Distributions paid		$ 11,924	$ 4,537
DRP [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Distributions paid	$ 10,741
Number of dividends issued	240,331