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 June 30, 2020

☐ 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

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

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  ☒

As of August 13, 2020, there were 36,020,345 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 June 30, 2020 (unaudited) and December 31, 2019	3
	Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2020 and 2019 (unaudited)	4
	Consolidated Statements of Equity for the three months ended June 30, 2020 and 2019 (unaudited)	5
	Consolidated Statements of Equity for the six months ended June 30, 2020 and 2019 (unaudited)	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	37
	Part II - Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

2

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share amounts) 

	June 30, 2020 (unaudited)			December 31, 2019
ASSETS
Assets:
Investment properties held and used:
Land	$	267,946		$	267,946
Building and other improvements		985,616			983,923
Total		1,253,562			1,251,869
Less accumulated depreciation		(189,052	)		(170,269	)
Net investment properties held and used		1,064,510			1,081,600
Investment properties and related assets held for sale		—			38,752
Cash and cash equivalents		31,624			4,516
Restricted cash		1,073			1,017
Accounts and rent receivable, net		22,974			17,231
Acquired lease intangible assets, net		80,790			89,352
Operating lease right-of-use asset, net		15,243			15,478
Other assets		4,685			6,613
Total assets	$	1,220,899		$	1,254,559
LIABILITIES AND EQUITY
Liabilities:
Mortgages and credit facility payable, net	$	669,328		$	681,327
Accounts payable and accrued expenses		9,446			7,951
Operating lease liability		23,863			23,696
Distributions payable		—			10,841
Acquired intangible liabilities, net		44,463			46,820
Due to related parties		2,773			5,023
Liabilities associated with investment properties held for sale		—			1,716
Other liabilities		26,499			16,666
Total liabilities		776,372			794,040
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, 36,020,345 and   35,799,388 shares issued and outstanding as of June 30, 2020 and December    31, 2019, respectively		36			36
Additional paid in capital		810,173			805,722
Accumulated distributions and net loss		(344,265	)		(338,331	)
Accumulated other comprehensive loss		(21,417	)		(6,908	)
Total stockholders’ equity		444,527			460,519
Total liabilities and stockholders’ equity	$	1,220,899		$	1,254,559

See accompanying notes to consolidated financial statements.

3

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Income:
Rental income	$	26,176		$	31,512		$	56,876		$	63,934
Other property income		53			69			114			122
Total income		26,229			31,581			56,990			64,056
Expenses:
Property operating expenses		4,037			5,438			9,534			11,113
Real estate tax expense		3,784			3,890			7,422			8,138
General and administrative expenses		1,447			1,361			2,687			2,873
Business management fee		2,231			2,335			4,460			4,668
Depreciation and amortization		12,833			14,089			26,137			28,615
Total expenses		24,332			27,113			50,240			55,407
Other Income (Expense):
Interest expense		(6,279	)		(7,170	)		(12,777	)		(14,323	)
Interest and other income		69			26			93			45
Net loss	$	(4,313	)	$	(2,676	)	$	(5,934	)	$	(5,629	)
Net loss per common share, basic and diluted	$	(0.12	)	$	(0.07	)	$	(0.16	)	$	(0.16	)
Weighted average number of common shares outstanding, basic    and diluted		36,020,150			35,686,902			36,019,771			35,635,436
Comprehensive loss:
Net loss	$	(4,313	)	$	(2,676	)	$	(5,934	)	$	(5,629	)
Unrealized loss on derivatives		(1,930	)		(7,206	)		(16,482	)		(11,406	)
Reclassification adjustment for amounts included in net loss		1,570			(443	)		1,973			(897	)
Comprehensive loss	$	(4,673	)	$	(10,325	)	$	(20,443	)	$	(17,932	)

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 June 30, 2020
	Number of Shares			Common Stock		Additional Paid in Capital			Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Loss			Total
Balance at March 31, 2020		36,020,341		$	36	$	810,182		$	(348,125	)	$	(21,057	)	$	441,036
Rescission of Q1 2020 distribution (See Note 8)		—			—		—			8,173			—			8,173
Shares repurchased		(1,743	)		—		(25	)		—			—			(25	)
Unrealized loss on derivatives		—			—		—			—			(1,930	)		(1,930	)
Reclassification adjustment for amounts included in net loss		—			—		—			—			1,570			1,570
Equity-based compensation		1,747			—		16			—			—			16
Net loss		—			—		—			(4,313	)		—			(4,313	)
Balance at June 30, 2020		36,020,345		$	36	$	810,173		$	(344,265	)	$	(21,417	)	$	444,527

For the three months ended June 30, 2019
	Number of Shares			Common Stock		Additional Paid in Capital			Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 31, 2019		35,447,385		$	35	$	798,483		$	(297,443	)	$	839		$	501,914
Distributions declared ($0.3018 per share)		—			—		—			(10,772	)		—			(10,772	)
Proceeds from distribution reinvestment plan		240,331			1		4,834			—			—			4,835
Shares repurchased		(117,452	)		—		(2,363	)		—			—			(2,363	)
Unrealized loss on derivatives		—			—		—			—			(7,206	)		(7,206	)
Reclassification adjustment for amounts included in net loss		—			—		—			—			(443	)		(443	)
Equity-based compensation		1,445			—		13			—			—			13
Net loss		—			—		—			(2,676	)		—			(2,676	)
Balance at June 30, 2019		35,571,709		$	36	$	800,967		$	(310,891	)	$	(6,810	)	$	483,302

See accompanying notes to consolidated financial statements.

5

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited, dollar amounts in thousands) 

For the six months ended June 30, 2020
	Number of Shares			Common Stock		Additional Paid in Capital			Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Loss			Total
Balance as of December 31, 2019		35,799,388		$	36	$	805,722		$	(338,331	)	$	(6,908	)	$	460,519
Distributions declared ($0.226875 per share)		—			—		—			(8,173	)		—			(8,173	)
Rescission of Q1 2020 distribution (See Note 8)		—			—		—			8,173			—			8,173
Proceeds from distribution reinvestment plan		225,940			—		4,547			—			—			4,547
Shares repurchased		(6,730	)		—		(127	)		—			—			(127	)
Unrealized loss on derivatives		—			—		—			—			(16,482	)		(16,482	)
Reclassification adjustment for amounts included in    net loss		—			—		—			—			1,973			1,973
Equity-based compensation		1,747			—		31			—			—			31
Net loss		—			—		—			(5,934	)		—			(5,934	)
Balance at June 30, 2020		36,020,345		$	36	$	810,173		$	(344,265	)	$	(21,417	)	$	444,527

For the six months ended June 30, 2019
	Number of Shares			Common Stock		Additional Paid in Capital			Accumulated Distributions and Net Loss			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2018		35,343,256		$	35	$	795,409		$	(283,859	)	$	5,493		$	517,078
Distributions declared ($0.6036 per share)		—			—		—			(21,513	)		—			(21,513	)
Proceeds from distribution reinvestment plan		484,748			1		10,297			—			—			10,298
Shares repurchased		(257,740	)		—		(4,765	)		—			—			(4,765	)
Unrealized loss on derivatives		—			—		—			—			(11,406	)		(11,406	)
Reclassification adjustment for amounts included in    net loss		—			—		—			—			(763	)		(763	)
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		1,445			—		26			—			—			26
Net loss		—			—		—			(5,629	)		—			(5,629	)
Balance at June 30, 2019		35,571,709		$	36	$	800,967		$	(310,891	)	$	(6,810	)	$	483,302

See accompanying notes to consolidated financial statements.

6

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, dollar amounts in thousands)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(5,934	)	$	(5,629	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		26,137			28,615
Amortization of debt issuance costs and mortgage premiums, net		290			302
Amortization of acquired market leases, net		(828	)		(600	)
Amortization of equity-based compensation		31			26
Reduction in the carrying amount of the right-of-use-asset		235			245
Straight-line income, net		(659	)		(826	)
Other non-cash adjustments		7			9
Changes in assets and liabilities:
Accounts payable and accrued expenses		1,383			1,125
Accounts and rent receivable		(4,391	)		594
Due to related parties		(2,260	)		88
Operating lease liability		167			157
Other liabilities		(1,105	)		(1,304	)
Other assets		303			30
Net cash flows provided by operating activities		13,376			22,832
Cash flows from investing activities:
Capital expenditures		(2,479	)		(3,833	)
Proceeds from sale of investment properties		37,255			—
Net cash flows provided by (used in) investing activities		34,776			(3,833	)
Cash flows from financing activities:
Payment of credit facility		(43,022	)		—
Proceeds from credit facility		31,000			—
Payment of mortgages payable		(267	)		(107	)
Proceeds from the distribution reinvestment plan		4,547			10,298
Shares repurchased		(2,405	)		(7,865	)
Distributions paid		(10,841	)		(22,666	)
Net cash flows used in financing activities		(20,988	)		(20,340	)
Net increase (decrease) in cash, cash equivalents and restricted cash		27,164			(1,341	)
Cash, cash equivalents and restricted cash, at beginning of the period		5,533			16,240
Cash, cash equivalents and restricted cash, at end of period	$	32,697		$	14,899

See accompanying notes to consolidated financial statements.

7

INLAND REAL ESTATE INCOME TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited, dollar amounts in thousands) 

	Six Months Ended June 30,
	2020		2019
Supplemental disclosure of cash flow information:
Cash paid for interest	$	12,515	$	13,360
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 capital expenditures	$	72	$	353
Accrued share repurchase program liability	$	—	$	2,363
Distributions payable	$	—	$	10,772

See accompanying notes to consolidated financial statements.

8

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(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, 2019, which are included in the Company’s 2019 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 is primarily focused on owning retail properties and targets 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 have completed the sale of 15 properties, including the sale of three properties during January 2020, as further described in Note 4 – “Dispositions,” with the goal of redeploying capital into the acquisition of strategically located grocery-anchored centers. The Company plans to move toward a liquidity event in the future, market conditions permitting, most likely through a listing on a public securities exchange.

In connection with the Strategic Plan, the Company’s share repurchase program (as amended, the “SRP”) was amended and restated, effective March 21, 2019, 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. On March 3, 2020, the Company’s SRP was further amended and restated (the “Third A&R SRP”), which became effective on April 10, 2020, as further described below in Note 3 – “Equity”. The Strategic Plan may evolve or change over time. For example, the Company may decide to focus more on redeveloping existing properties relative to investing in new grocery-anchored centers, depending on such factors, including, but not limited to, market prices for its properties, availability of capital for redevelopment and construction costs. There is no assurance, particularly in light of the COVID-19 pandemic, that the Company will be able to successfully implement the Strategic Plan, including listing the Company’s common stock, within the timeframe we would expect or would prefer or at all.

On March 3, 2020, as reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on March 5, 2020, 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, 2019; (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 that was expected April 2020 until the Company announces a new Estimated Per Share NAV, and (iii) that, in accordance with the SRP, beginning with repurchases that were expected in April 2020 and until the Company announces a new Estimated Per Share NAV, any shares accepted for ordinary repurchases and “exceptional repurchases” will be repurchased at 80% of the Estimated Per Share NAV.

Due to the uncertainty surrounding the COVID-19 pandemic and the need to preserve cash for the payment of operating and other fundamental expenses, such as debt payments, the Company’s board of directors has suspended distributions, rescinded the first quarter distribution that was previously declared and suspended the Company’s DRP and SRP until further notice. The suspension of the DRP was effective on June 6, 2020 and the suspension of the SRP was effective on June 26, 2020. Any unfulfilled repurchase requests will automatically roll over for processing under the terms and conditions of the SRP when the Company restarts the plan, unless a stockholder withdraws the request for repurchase.

At June 30, 2020, the Company owned 44 retail properties, totaling 6,470,347 square feet.  The properties are located in 21 states.  At June 30, 2020, the portfolio had a weighted average physical occupancy of 93.4% and economic occupancy of 94.0%.

9

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

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, 2019, as filed with the Securities and Exchange Commission on March 18, 2020, under the heading Note 2 – “Summary of Significant Accounting Policies.” There have been no changes to the Company’s significant accounting policies during the six months ended June 30, 2020, 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.

Significant Risks and Uncertainties related to COVID-19 Pandemic

Currently, one of the most significant risks and uncertainties is the potential further adverse effect of the current pandemic of the novel coronavirus, or COVID-19. A number of our tenants had temporarily closed their stores and requested rent deferral or rent abatement during this pandemic. Many experts predict that the outbreak will trigger, or even has already triggered, a period of global economic slowdown or a global recession.

The COVID-19 pandemic has already had a material impact on the Company’s operations (See Note  5 – “Leases”) and could continue to have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to, the following:

• reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and has caused tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income;

• a prolonged economic recession in the U.S. would negatively impact the Company’s ability to lease space and negotiate and maintain favorable rents causing reductions in occupancy and rental income;

• the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and

• weaker economic conditions and defaults or failures by tenants to pay rent when due could cause us to recognize impairment in value of our tangible or intangible assets.

The extent to which the COVID-19 pandemic impacts the Company’s operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

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

10

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

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 its consolidated statements 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.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of the effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A grants relief to entities, allowing them an election to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. An entity that makes this election can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company has elected to apply such relief and will avail itself of the election to avoid performing a lease by lease analysis.

11

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(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:

	June 30,
	2020		2019
Cash and cash equivalents	$	31,624	$	13,897
Restricted cash		1,073		1,002
Total cash, cash equivalents, and restricted cash	$	32,697	$	14,899

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”). The Company’s investment in Mainstreet JV was held through a taxable REIT subsidiary. The TRS is expected to report both capital and net operating losses relating to its joint venture in its 2019 tax return. 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 this investment 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 sold 33,534,022 shares of common stock generating gross proceeds of $834,399 from the Offering.  As of June 30, 2020, there were 36,020,345 shares of common stock outstanding including 5,574,215 shares issued through the DRP, net of 3,092,634 shares repurchased through the SRP.    

On March 3, 2020, the Company’s board of directors determined the Estimated Per Share NAV as of December 31, 2019. The previously Estimated Per Share NAV as of December 31, 2018 was established on March 5, 2019.

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 $4,835 for the three months ended June 30, 2019. There were no distributions reinvested through the DRP during the three months ended June 30, 2020 due to the suspension of the DRP discussed in Note 1 – “Organization.” Distributions reinvested through the DRP were $4,547 and $10,298 for the six months ended June 30, 2020 and 2019, respectively.

12

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(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. The SRP may be amended or terminated at the Company’s sole discretion. In the case of repurchases made upon the death of a stockholder or qualifying disability (“Exceptional Repurchases”), as defined in the SRP, the one year holding period does not apply. On February 11, 2019, the Company’s board of directors adopted a second amended and restated SRP, effective March 21, 2019, which reduced the price the Company was authorized to make ordinary repurchases from a range of 92.5% to 100% of the “share price” down to 80% of the “share price.” The “share price” is defined in the second amended and restated 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. On March 3, 2020 the Company’s board of directors adopted the Third A&R SRP. Under the Third A&R SRP, the Company is authorized to make ordinary repurchases and Exceptional Repurchases at a price equal to 80.0% of the “share price,” which is defined in the Third A&R SRP the same way as described above for the second amended and restated SRP. Prior to the amendment, the Company was authorized to make Exceptional Repurchases at a price equal to 100% of the “share price.”

The Third A&R SRP provides the Company’s board of directors with the discretion to reduce the funding limit for share repurchases. The Third 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.  As the Company’s board of directors has suspended the SRP, there is no current effective funding limit based on % of the net proceeds from the DRP. See Note 1 – “Organization” for further discussion on the suspension of the SRP. 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 Exceptional Repurchases 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 discretion, may, at any time, amend, suspend or terminate the SRP.

Repurchases through the SRP were $25 and $2,363 for the three months ended June 30, 2020 and 2019, respectively. Repurchases through the SRP were $127 and $4,765 for the six months ended June 30, 2020 and 2019, respectively. At December 31, 2019, the Company’s liability related to the SRP was $2,278, recorded in other liabilities on the Company’s consolidated balance sheet. There was no liability related to the SRP at June 30, 2020 due to the suspension of the SRP. See Note 1 – “Organization” for further discussion on the suspension of the SRP.

NOTE 4 – DISPOSITIONS

In connection with the Strategic Plan, the Company sold three properties in January 2020 that met the criteria to be classified as held for sale on the consolidated balance sheet at December 31, 2019. The criteria were met for these properties because, amongst other criteria, the Company had collected non-refundable earnest money from the buyer. The Company collected proceeds of $37,255 net of selling costs upon completion of the three sales.

13

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

The following table reflects the major components of the assets and liabilities associated with investment properties held for sale as of December 31, 2019:

	December 31, 2019
Investment properties and related assets held for sale:
Land	$	6,275
Building and other improvements		27,758
Accounts and rent receivable		1,167
Acquired lease intangible assets, net		3,337
Deferred costs, net		186
Other assets		29
Investment properties and related assets held for sale	$	38,752
Liabilities associated with investment properties held for sale:
Accounts payable and accrued expenses	$	691
Due to related parties		6
Acquired intangible liabilities, net		743
Other liabilities		276
Liabilities associated with investment properties held for sale	$	1,716

NOTE 5 – 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 17 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.

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 statements of operations and comprehensive loss.

14

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Rental income - fixed payments	$	20,938	$	25,309	$	44,968	$	50,804
Rental income - variable payments (a)		5,005		5,811		11,080		12,530
Amortization of acquired market leases, net		233		392		828		600
Rental income	$	26,176	$	31,512	$	56,876	$	63,934

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

The Company is closely monitoring the impact of the COVID-19 pandemic on the collectability of lease payments. As of June 30, 2020, the Company’s accounts and rent receivable, net balance is $22,974, which is net of an allowance for bad debts of $3,627 and includes $4,477 of deferred rent receivable related to COVID-19 agreements negotiated with tenants. Such agreements generally allow tenants to defer the payment of a portion of rent with no substantive changes to the consideration in the original lease. Consistent with the guidance in the Lease Modification Q&A issued by the FASB, such deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its rent receivable as tenant payments accrue and continues to recognize rental income.

NOTE 6 – ACQUIRED INTANGIBLE ASSETS AND LIABILITIES

The following table summarizes the Company’s identified intangible assets and liabilities as of June 30, 2020 and December 31, 2019: 

	June 30, 2020			December 31, 2019
Intangible assets:
Acquired in-place lease value	$	156,918		$	160,214
Acquired above market lease value		45,742			45,783
Accumulated amortization		(121,870	)		(113,308	)
Less: Assets related to investment properties held for sale		—			(3,337	)
Acquired lease intangibles, net	$	80,790		$	89,352
Intangible liabilities:
Acquired below market lease value	$	70,260		$	71,153
Accumulated amortization		(25,797	)		(23,590	)
Less: Liabilities related to investment properties held for sale		—			(743	)
Acquired below market lease intangibles, net	$	44,463		$	46,820

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.

15

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Amortization recorded as amortization expense:
Acquired in-place lease value	$	3,305		$	4,188		$	7,033		$	9,029
Amortization recorded as a (reduction) increase to rental income:
Acquired above market leases	$	(746	)	$	(846	)	$	(1,529	)	$	(1,750	)
Acquired below market leases		979			1,238			2,357			2,350
Net rental income increase	$	233		$	392		$	828		$	600

Estimated amortization of the respective intangible lease assets and liabilities as of June 30, 2020 for each of the five succeeding years and thereafter is as follows:  

	Acquired In-Place Leases		Above Market Leases		Below Market Leases
2020 (remainder of year)	$	5,941	$	1,491	$	1,891
2021		10,537		2,953		3,689
2022		7,898		2,664		3,456
2023		6,671		2,477		3,198
2024		5,664		2,308		3,021
Thereafter		18,691		13,495		29,208
Total	$	55,402	$	25,388	$	44,463

NOTE 7 – DEBT AND DERIVATIVE INSTRUMENTS

As of June 30, 2020 and December 31, 2019, the Company had the following mortgages and credit facility payable:

	June 30, 2020						December 31, 2019
Type of Debt	Principal Amount			Weighted Average Interest Rate			Principal Amount			Weighted Average Interest Rate
Fixed rate mortgages payable	$	163,876			4.25	%	$	163,986			4.25	%
Variable rate mortgages payable with swap agreements		252,087			3.33	%		252,244			3.33	%
Variable rate mortgages payable without swap agreements		684			1.77	%		684			3.29	%
Mortgages payable	$	416,647			3.69	%	$	416,914			3.69	%
Credit facility payable		255,000			3.27	%		267,022			3.92	%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$	671,647			3.53	%	$	683,936			3.78	%
Add: Unamortized mortgage premiums		735						1,051
Less: Unamortized debt issuance costs		(3,054	)					(3,660	)
Total debt	$	669,328					$	681,327

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 $671,647 and $683,936 as of June 30, 2020 and December 31, 2019, respectively, and its estimated fair value was $686,352 and $689,790 as of June 30, 2020 and December 31, 2019, respectively.

16

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

As of June 30, 2020, scheduled principal payments and maturities on the Company’s debt were as follows:

	June 30, 2020
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgage Loans		Maturity of Credit Facility		Total
2020 (remainder of the year)	$	648	$	—	$	—	$	648
2021		1,532		82,740		—		84,272
2022		615		101,537		105,000		207,152
2023		326		91,230		150,000		241,556
2024		341		—		—		341
Thereafter		295		137,383		—		137,678
Total	$	3,757	$	412,890	$	255,000	$	671,647

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 subject to the terms and conditions, including compliance with the covenants, of the Amended and Restated Credit Agreement that governs the Credit Facility.

At June 30, 2020, the Company had $105,000 outstanding under the Revolving Credit Facility and $150,000 outstanding under the Term Loan.  At June 30, 2020 the interest rate on the Revolving Credit Facility and the Term Loan was 1.83% 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 June 30, 2020, the Company had $95,000 available for borrowing under the Revolving Credit Facility, subject to the terms and conditions, including compliance with the covenants, of the Amended and Restated Credit Agreement that governs the 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 June 30, 2020, there were 25 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.  As of June 30, 2020, 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 June 30, 2020, 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 June 30, 2020, the weighted average years to maturity for the Company’s mortgages payable was 3.2 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.

17

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

The following table summarizes the Company’s interest rate swap contracts outstanding as of June 30, 2020.

Date Entered	Effective Date	Maturity Date	Pay Fixed Rate (a)			Notional Amount		Fair Value at June 30, 2020
Liabilities
February 11, 2015	March 2, 2015	March 1, 2022		2.02	%		6,114		(192	)
April 7, 2015	April 7, 2015	April 7, 2022		1.74	%		49,244		(1,373	)
September 17, 2015	September 17, 2015	September 17, 2022		1.90	%		13,700		(534	)
October 2, 2015	November 1, 2015	November 1, 2022		1.79	%		13,100		(506	)
December 23, 2015	December 23, 2015	January 2, 2026		2.30	%		26,000		(2,811	)
January 25, 2016	February 1, 2016	February 1, 2021		1.40	%		38,000		(279	)
June 7, 2016	July 1, 2016	July 1, 2023		1.42	%		43,680		(1,677	)
July 21, 2016	August 1, 2016	August 1, 2023		1.30	%		47,550		(1,689	)
June 5, 2017	May 31, 2017	May 15, 2022		1.90	%		14,700		(485	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		60,000		(4,747	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(1,978	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(1,981	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		40,000		(3,165	)
						$	402,088	$	(21,417	)

(a)   Receive floating rate index based upon one-month LIBOR. At June 30, 2020, the one-month LIBOR was 0.16%.

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 for the three and six months ended June 30, 2020 and 2019.

	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2020			2019			2020			2019
Effective portion of derivatives	$	(1,930	)	$	(7,206	)	$	(16,482	)	$	(11,406	)
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$	1,570		$	(443	)	$	1,973		$	(897	)

The total amount of interest expense presented on the consolidated statements of operations and comprehensive loss was $6,279 and $7,170, for the three months ended June 30, 2020 and 2019, respectively. The total amount of interest expense presented on the consolidated statements of operations and comprehensive loss was $12,777 and $14,323 for the six months ended June 30, 2020 and 2019, respectively. The location of the net gain or loss reclassified into income from accumulated other comprehensive loss is reported in interest expense on the consolidated statements of operations and comprehensive loss. The amount that is expected to be reclassified from accumulated other comprehensive loss into income in the next twelve months is $7,451.

NOTE 8 – DISTRIBUTIONS

Due to the uncertainty surrounding the COVID-19 pandemic and the need to preserve cash for the payment of operating and other fundamental expenses, during the second quarter the Company’s board of directors rescinded the first quarter distribution and suspended distributions until further notice.

In 2019, the Company declared quarterly distributions in the amount of $0.3018 per share, payable in arrears the following quarter.

18

INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

The table below presents the distributions paid, declared and rescinded during the three and six months endedJune 30, 2020 and 2019.

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Distributions paid	$	—		$	10,742	$	10,841		$	22,666
Distributions declared	$	—		$	10,772	$	8,173		$	21,513
Distributions rescinded	$	(8,173	)	$	—	$	(8,173	)	$	—

NOTE 9 – 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 and six months ended June 30, 2020, 6,892 shares and 6,667 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive. As a result of a net loss in the three and six months ended June 30, 2019, 4,648 shares and 4,381 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive.

NOTE 10 – 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 11 – 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 are 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 are included in common stock outstanding on the date of vesting. Restricted share units are included in common stock outstanding on the date they are transferred to the non-employee director or their beneficiary. 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 $16 and $31, in the aggregate, for the three and six months ended June 30, 2020, respectively. As of June 30, 2020, the Company had $105 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 1.8 years. The total fair value at the vesting date for restricted shares and restricted share units that vested during both the three and six months ended June 30, 2020 was $46. The total fair value at the vesting date for restricted shares and restricted share units that vested during both the three and six months ended June 30, 2019 was $39.

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

	Restricted Shares			Restricted Share Units
Outstanding at December 31, 2019		3,906			1,480
Granted (at grant date fair value of $18.15 per share)		4,408			—
Vested		(1,747	)		(760	)
Outstanding at June 30, 2020		6,567			720

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INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

NOTE 12 – SEGMENT REPORTING

The Company has one reportable segment as defined by U.S. GAAP, retail real estate, for the six months ended June 30, 2020 and 2019.

NOTE 13 – TRANSACTIONS WITH RELATED PARTIES

The following table summarizes the Company’s related party transactions for the six months ended June 30, 2020 and 2019. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts.

		Three Months Ended June 30,				Six Months Ended June 30,				Unpaid amounts as of
		2020		2019		2020		2019		June 30, 2020		December 31, 2019
General and administrative reimbursements	(a)	$	461	$	387	$	790	$	725	$	252	$	188
Real estate management fees		$	784	$	1,207	$	1,869	$	2,293	$	—	$	—
Property operating expenses			271		284		546		568		181		—
Construction management fees			5		25		9		74		27		23
Leasing fees			23		65		106		154		82		143
Total real estate management related costs	(b)	$	1,083	$	1,581	$	2,530	$	3,089	$	290	$	166
Business management fees	(c)	$	2,231	$	2,335	$	4,460	$	4,668	$	2,231	$	4,675

(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. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

(b) 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. As of December 31, 2019, unpaid construction management fees of $6 are included in liabilities associated with investment properties held for sale on the consolidated balance sheet. The remaining unpaid amounts are included in due to related parties on the consolidated balance sheet.

(c) 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. Unpaid amounts are included in due to related parties on the consolidated balance sheets.  

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INLAND REAL ESTATE INCOME TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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

NOTE 14 – 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 June 30, 2020 and December 31, 2019, respectively.

	Fair Value
	Level 1		Level 2		Level 3		Total
June 30, 2020
Interest rate swap agreements - Other assets	$	—	$	—	$	—	$	—
Interest rate swap agreements - Other liabilities	$	—	$	21,417	$	—	$	21,417
December 31, 2019
Interest rate swap agreements - Other assets	$	—	$	715	$	—	$	715
Interest rate swap agreements - Other liabilities	$	—	$	7,622	$	—	$	7,622

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.

NOTE 15 – SUBSEQUENT EVENTS

In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to June 30, 2020 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements.

There were no reportable subsequent events or transactions.

21

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, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as filed with the Securities and Exchange Commission on May 13, 2020, and in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on March 18, 2020, and factors described below:

• Market disruptions resulting from the economic effects of the COVID-19 pandemic or otherwise will adversely impact many aspects of our operating results and financial condition, including our ability to service our debt obligations, borrow additional monies or pay distributions;

• We have incurred net losses on a U.S. generally accepted accounting principles (“U.S. GAAP”) basis for the three and six months ended June 30, 2020 and 2019 and for the year ended December 31, 2019;

• There is no established public trading market for our shares, our stockholders cannot currently sell their shares under our share repurchase program (as amended, “SRP”), which has been suspended and may be amended or terminated in our sole discretion, and even if the SRP is restarted, stockholders may not be able to sell all of the shares they would like to sell;

• Even 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, particularly in light of the COVID-19 pandemic;

• 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, among other things, 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

• The strategic plan adopted by our board of directors on February 11, 2019, which is described further below, may evolve or change over time, and there is no assurance we will be able to successfully achieve our board’s objectives under the strategic plan, including listing our common stock.

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• We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, including negative impacts on our tenants and their respective businesses;

• The use of the internet by consumers to shop is expected to continue to expand, and this expansion may be accelerated by the effects of the COVID-19 pandemic, which would result in a further downturn in the business of our current tenants in their “brick and mortar” locations and could affect their ability to pay rent and the way they lease retail center space; and

• We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in credit markets of the United States from time to time, including disruptions and dislocations caused by the ongoing COVID-19 pandemic.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Quarterly Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.

The following discussion and analysis relates to the six months ended June 30, 2020 and 2019 and as of June 30, 2020 and December 31, 2019. You should read the following discussion and analysis along with our consolidated financial statements and the related notes included in this report.

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

Overview

We were formed as a Maryland corporation on August 24, 2011 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 are primarily focused on owning retail properties and 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 June 30, 2020, we had total assets of $1.2 billion and owned 44 properties located in 21 states containing 6.5 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 June 30, 2020, 85% of our annualized base rental income was generated from grocery-anchored or grocery shadow-anchored shopping centers. A grocery shadow-anchored shopping center is a shopping center located near a grocery store that generates traffic for the shopping center, but which is not a part of the shopping center. The portfolio properties have staggered lease maturity dates and anchor tenants generally with strong credit ratings. Grocery tenants accounted for 14.7% of our annualized base rent (“ABR”) as of June 30, 2020.

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 3, 2020, our board of directors determined an estimated per share net asset value of our common stock of $18.15 as of December 31, 2019.  

COVID-19 Pandemic

We are closely monitoring the impact of the novel coronavirus (“COVID-19”) pandemic on all aspects of our business and locations, including how it is impacting our tenants and vendors. In the second quarter, we recognized bad debt expense of $3.1 million mostly as a result of the pandemic. Additionally, we deferred $4.5 million of rent during the second quarter pursuant to agreements negotiated with tenants in the wake of the COVID-19 pandemic. See Note 5 – “Leases” for additional information. We are unable to predict with certainty the future impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to numerous uncertainties.

In addition, we cannot predict the impact that COVID-19 will have on our tenants and other business partners, such as vendors and service providers; however, any material effect on these parties would adversely impact us. As of August 10, 2020, many tenants are

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operating in a materially reduced capacity. As of August 10, 2020, rents collected as a percentage of billings, applying cash received to the billed amounts that have been outstanding for the longest period of time, were 81% in April, 76% in May, 74% in June, and 87% in July. Total cash received in the form of rent payments (without applying the cash to any particular amount due) during the month of May increased by $1.1 million from April (from $5.7 million to $6.8 million). June cash rent receipts increased $1.7 million from May (from $6.8 million to $8.5 million), which also represents a very slight increase from the $8.4 million of cash rent payments received in March before most of the effects of the pandemic were felt by our tenants. July cash rent receipts increased by $1.5 million from June (from $8.5 million to $10.0 million). Payment plans mostly in the form of rent deferrals have been reached with 247 leases comprising40% of annualized base rent and we are still in active negotiations with other tenants.Deferrals represent $5.6 million in total rent, and modifications and rent abatements represent $1.7 million in total rent. Deferrals and abatements agreed upon with anchor tenants represent $4.6 million in rent, versus $2.7 million agreed upon with small-shop tenants. Not all tenant requests will ultimately result in payments plans, and we manage negotiations with tenants on a case-by-case basis. We have sent some tenants notices of default, including to one of our ten largest tenants by annualized base rent, which has since resumed paying rent but with which we are still negotiating with respect to unpaid amounts still owed. July and August collections and rent relief requests to-date may not be indicative of collections or requests in any future period.We are closely monitoring the impact of the COVID-19 pandemic on the collectability of lease payments.

The impact of the COVID-19 pandemic on our rental revenue for the third quarter of 2020 and thereafter cannot, however, be determined at present. The situation surrounding the COVID-19 pandemic remains fluid, and we are actively managing our response in collaboration with tenants, government officials and business partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business.

We rely on the Business Manager to manage our day-to-day operations. Though many people are able to work remotely, the business and operations of our Business Manager and its affiliates may also be adversely impacted by the coronavirus outbreak, including illness or quarantine of members of its workforce, which may negatively impact on its ability to provide us services to the same degree as it had prior to the outbreak.

For further information regarding the potential impact of COVID-19 on the Company, see Part II, Item 1A titled “Risk Factors.”

Company Update – Three and Six Months Ended June 30, 2020

On February 11, 2019, our board of directors approved a strategic plan with the goal of providing a 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, our management team and our board of directors are considering the opportunistic sale of certain assets with the goal of redeploying capital into the acquisition of strategically located grocery-anchored centers. We plan to move toward a liquidity event in the future, market conditions permitting, most likely through a listing on a public securities exchange. As part of the strategic plan, we preliminarily identified a select number of properties we would consider selling and marketed them. As further described in Note 4 – “Dispositions”, we have completed the sale of three of the selected properties in the first quarter. The strategic plan may evolve or change over time. For example, we may decide to focus more on redeveloping existing properties relative to investing in new grocery-anchored centers, depending on such factors, including, but not limited to, market prices for our properties, availability of capital for redevelopment and construction costs. There is no assurance we will be able to successfully implement the strategic plan, including listing our common stock, and the timing of the execution of the strategic plan may be impacted by the COVID-19 pandemic.

To preserve cash for the payment of operating and other fundamental expenses, such as debt payments, during the COVID-19 pandemic, our board of directors has suspended distributions and rescinded the first quarter distribution that was expected to be paid on June 1, 2020 to stockholders of record on May 29, 2020. Our board of directors has also suspended our DRP and SRP until further notice. These actions are being taken until there is better clarity on our tenants’ ability and willingness to pay rent and meet other lease obligations and, ultimately, the performance of our shopping centers. The suspension of the DRP was effective on June 6, 2020 and the suspension of the SRP was effective on June 26, 2020. Any unfulfilled repurchase requests will automatically roll over for processing under the terms and conditions of the SRP when we restart our plan, unless a stockholder withdraws the request for repurchase.

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

Investment Properties

	As of June 30, 2020
Number of properties	44
Purchase price	$	1,344,979
Total square footage		6,470,347
Weighted average physical occupancy		93.4	%
Weighted average economic occupancy		94.0	%
Weighted average remaining lease term (years)		5.2

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The table below presents information for each of our investment properties as of June 30, 2020.

Property	Location	Square Footage		Physical Occupancy			Economic Occupancy			Mortgage Balance		Interest Rate (b)
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		62.2	%		85.4	%		—		—
North Hills Square (a)	Coral Springs, FL		63,829		100.0	%		100.0	%		—		—
Mansfield Shopping Center (a)	Mansfield, TX		148,529		96.3	%		96.3	%		—		—
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		90.0	%		90.0	%		—		—
Pick N Save Center (a)	West Bend, WI		94,000		98.9	%		98.9	%		—		—
Harris Plaza (a)	Layton, UT		125,965		81.4	%		81.4	%		—		—
Dixie Valley	Louisville, KY		119,981		92.5	%		92.5	%		6,798		3.43	%
The Landings at Ocean Isle (a)	Ocean Isle, NC		53,203		97.4	%		97.4	%		—		—
Shoppes at Prairie Ridge (a)	Pleasant Prairie, WI		232,606		92.6	%		92.6	%		—		—
Harvest Square	Harvest, AL		70,590		92.1	%		92.1	%		6,429		4.65	%
Heritage Square	Conyers, GA		22,510		95.8	%		95.8	%		4,460		5.10	%
The Shoppes at Branson Hills (a)	Branson, MO		256,329		74.9	%		74.9	%		—		—
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		87.6	%		87.6	%		—		—
Shoppes at Lake Park (a)	W. Valley City, UT		52,997		96.1	%		96.1	%		—		—
Plaza at Prairie Ridge (a)	Pleasant Prairie,WI		9,035		100.0	%		100.0	%		—		—
Green Tree Shopping Center	Katy, TX		147,621		98.3	%		98.3	%		13,100		3.24	%
Eastside Junction	Athens, AL		79,700		87.7	%		87.7	%		5,971		4.60	%
Fairgrounds Crossing	Hot Springs, AR		155,127		97.4	%		97.4	%		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		94.6	%		94.6	%		26,000		4.50	%
Shops at Hawk Ridge (a)	St. Louis, MO		75,951		100.0	%		100.0	%		—		—
Walgreens Plaza	Jacksonville, NC		42,219		79.0	%		79.0	%		4,650		5.30	%
Frisco Marketplace (a)	Frisco, TX		112,024		90.9	%		94.9	%		—		—
White City	Shrewsbury, MA		257,121		89.6	%		90.8	%		49,243		3.24	%
Yorkville Marketplace (a)	Yorkville, IL		111,591		92.4	%		92.4	%		—		—
Shoppes at Market Pointe	Papillion, NE		253,903		98.2	%		98.2	%		13,700		3.30	%
Marketplace at El Paseo	Fresno, CA		224,683		98.2	%		99.0	%		38,000		2.95	%
The Village at Burlington Creek	Kansas City, MO		158,049		72.4	%		72.4	%		17,723		4.25	%
Milford Marketplace	Milford, CT		111,720		89.4	%		89.4	%		18,727		4.02	%
Settlers Ridge	Pittsburgh, PA		473,821		99.1	%		99.1	%		76,533		3.70	%
Blossom Valley Plaza (a)	Turlock, CA		111,435		95.2	%		95.2	%		—		—
Oquirrh Mountain Marketplace (a)	South Jordan, UT		75,950		97.2	%		97.2	%		—		—
Marketplace at Tech Center	Newport News, VA		210,297		89.9	%		95.0	%		47,550		3.15	%
Coastal North Town Center	Myrtle Beach, SC		304,662		95.6	%		95.6	%		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			6,470,347		93.4	%		94.0	%	$	416,647		3.69	%

(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 June 30, 2020.

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		3.6	%	$	13.52		249,493		3.8	%
The TJX Companies, Inc.		12		3,030		3.2	%		9.83		308,253		4.8	%
Ross Dress for Less, Inc.		9		2,449		2.6	%		10.32		237,165		3.7	%
Albertsons/Jewel/Shaw's		2		2,304		2.5	%		18.02		127,892		2.0	%
Ulta Salon, Cosmetics & Fragrance Inc.		9		2,151		2.3	%		22.73		94,658		1.5	%
PetSmart		7		2,020		2.2	%		14.58		138,578		2.1	%
Dicks Sporting Goods, Inc.		4		2,012		2.2	%		11.13		180,766		2.8	%
LA Fitness (Fitness International)		2		1,966		2.1	%		21.94		89,600		1.4	%
Kohl's Department Stores		4		1,888		2.0	%		5.68		332,461		5.1	%
Giant Eagle		1		1,805		1.9	%		13.96		129,340		2.0	%
Top ten tenants		54	$	22,999		24.6	%	$	12.18		1,888,206		29.2	%

The following table sets forth a summary of our tenant diversity for our entire portfolio and is based on leases in-place at June 30, 2020.

Tenant Type	GrossLeasable Area – Square Footage		Percent of Total Gross Leasable Area			Percent of Total Annualized Base Rent
Discount and Department Stores		1,418,634		23.3	%		11.5	%
Home Goods		989,850		16.3	%		9.3	%
Grocery		950,042		15.6	%		14.7	%
Lifestyle, Health Clubs, Books & Phones		736,227		12.1	%		16.0	%
Restaurant		537,407		8.8	%		16.7	%
Apparel & Accessories		411,153		6.8	%		9.6	%
Consumer Services, Salons, Cleaners, Banks		258,225		4.2	%		7.7	%
Pet Supplies		245,245		4.0	%		4.2	%
Sporting Goods		238,447		3.9	%		3.4	%
Health, Doctors & Health Foods		154,594		2.5	%		4.7	%
Other		143,437		2.5	%		2.2	%
Total		6,083,261		100.0	%		100.0	%

The following table sets forth a summary of our property type based on annualized base rent for in-place leases and rents collected as a percentage of billings, applying cash received to the billed amounts that have been outstanding for the longest period of time, as of August 10, 2020.

Property Type	Percent of Total Annualized Base Rent			Collections Applied to April Rent			Collections Applied to May Rent			Collections Applied to June Rent			Collections Applied to July Rent
Grocery		54	%		81	%		76	%		73	%		89	%
Grocery Shadow-Anchored		31	%		81	%		80	%		80	%		88	%
Community Center		8	%		83	%		78	%		86	%		80	%
Power Center		7	%		78	%		59	%		38	%		77	%
Total		100	%		81	%		76	%		74	%		87	%

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The following table sets forth a summary, as of June 30, 2020, 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	%		6.1
Junior Box	5,000-9,999		13	%		5.2
Small Shop	Less than 5,000		35	%		3.8
Total			100	%		5.2

Lease Expirations

The following table sets forth a summary, as of June 30, 2020, of lease expirations scheduled to occur during the remainder of 2020 and each of the calendar years from 2021 to 2029 and thereafter, assuming no exercise of renewal options or early termination rights for leases commenced on or prior to June 30, 2020. Annualized base rent represents the rent in-place of the applicable property at June 30, 2020. The table below includes ground leases. If ground leases are excluded, annualized base rent would equal $83,693 or $18.04 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
2020 (including month-to-month)		52		161,073		2.7	%	$	2,832		3.0	%	$	17.58
2021		88		340,920		5.6	%		6,951		7.5	%		20.39
2022		98		608,755		10.3	%		11,456		12.3	%		18.82
2023		110		822,429		13.3	%		12,547		13.4	%		15.26
2024		110		770,929		12.6	%		14,553		15.6	%		18.88
2025		103		802,366		13.2	%		14,203		15.2	%		17.70
2026		45		445,127		8.2	%		6,472		6.9	%		14.54
2027		26		320,960		4.4	%		4,160		4.5	%		12.96
2028		30		683,949		11.2	%		6,235		6.7	%		9.12
2029		13		188,084		3.1	%		2,653		2.8	%		14.10
Thereafter		34		938,669		15.4	%		11,251		12.1	%		11.99
Leased Total		709		6,083,261		100.0	%	$	93,313		100.0	%	$	15.34

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LIQUIDITY AND CAPITAL RESOURCES

General

Our primary uses and sources of cash are as follows:

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

During January 2020, we completed the sale of three properties generating net proceeds of $37.3 million.

At June 30, 2020, we had $105 million outstanding under the Revolving Credit Facility and $150 million outstanding under the Term Loan.  At June 30, 2020 the interest rate on the Revolving Credit Facility and the Term Loan was 1.83% 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 June 30, 2020, we had $95 million available for borrowing under the Revolving Credit Facility, subject to the terms and conditions, and assuming compliance with the covenants, of the Amended and Restated Credit Agreement that governs the Credit Facility.Although $95 million is available, a substantially lesser amount may be available to be drawn over the next twelve months due to covenant limitations, particularly maximum corporate leverage.

As of June 30, 2020, we had total debt outstanding of $671.6 million, excluding mortgage premiums and unamortized debt issuance costs, which bore interest at a weighted average interest rate of 3.53% per annum.  As of June 30, 2020, the weighted average years to maturity for our debt was 3.0 years. As of June 30, 2020 and December 31, 2019, our borrowings were 50% and 49%, respectively, of the purchase price of our investment properties. At June 30, 2020 our cash and cash equivalents balance was $31.6 million.

In the next twelve months, we have four debt maturities with an aggregate principal balance of $63.0 million, which we have the intent to refinance. For information related to our debt maturities reference is made to Note 7 – “Debt and Derivative Instruments” which is included in our June 30, 2020 Notes to Consolidated Financial Statements in Item 1.

To preserve cash for the payment of operating and other fundamental expenses, such as debt payments, our board of directors has suspended distributions and rescinded the first quarter distribution that was expected to be paid on June 1, 2020 to stockholders of record on May 29, 2020. Our board of directors has also suspended our DRP and SRP until further notice. These actions are being taken until there is better clarity on our tenants’ ability and willingness to pay rent and meet other lease obligations and, ultimately, the performance of our shopping centers. The suspension of the DRP was effective on June 6, 2020 and the suspension of the SRP was effective on June 26, 2020. Any unfulfilled repurchase requests will automatically roll over for processing under the terms and conditions of the SRP when we restart our plan, unless a stockholder withdraws the request for repurchase.

As of June 30, 2020, we have paid all interest and principal amounts when due, and are in compliance with all financial covenants related to the Credit Facility. Due to the current level of operations of our tenants as a result of the COVID-19 pandemic, and based on certain assumptions related to tenant bankruptcies and bad debt expense in our projections beginning with the third quarter results of operations, although we do not believe an event of default and enforcement of remedies, such as acceleration, by the lender is probable, we have initiated discussions with our lenders to negotiate a waiver related to the Consolidated Tangible Net Worth covenant or a modification of our Credit Facility. Based on these discussions, we believe that we will be successful in obtaining a waiver, should it be necessary, or modification, but we cannot provide assurance that we will be successful and cannot predict the terms of any such waiver or modification. See our Part II, Item 1A titled “Risk Factors” below and in our Annual Report on Form 10-K for discussion of risks stemming from our use of debt and a potential failure to comply with a covenant under the Credit Facility.

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Cash Flow Analysis

	Six Months Ended June 30,						Change
	2020			2019			2020 vs. 2019
	(Dollar amounts in thousands)
Net cash flows provided by operating activities	$	13,376		$	22,832		$	(9,456	)
Net cash flows provided by (used in) investing activities	$	34,776		$	(3,833	)	$	38,609
Net cash flows used in financing activities	$	(20,988	)	$	(20,340	)	$	(648	)

Operating activities

The decrease in cash from operating activities during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily due to a delay in rent collections due to the COVID-19 pandemic and the timing of business manager fee payments.

Investing activities

	Six Months Ended June 30,						Change
	2020			2019			2020 vs. 2019
	(Dollar amounts in thousands)
Capital expenditures	$	(2,479	)	$	(3,833	)	$	1,354
Proceeds from sale of investment properties		37,255			—			37,255
Net cash provided by (used in) investing activities	$	34,776		$	(3,833	)	$	38,609

Cash was provided by our investing activities in the six months ended June 30, 2020 compared to the cash used in the six months ended June 30, 2019. The primary change from the prior year was our receipt of $37.3 million of proceeds from the sale of three properties during January 2020.

Financing activities

	Six Months Ended June 30,						Change
	2020			2019			2020 vs. 2019
	(Dollar amounts in thousands)
Total changes related to debt	$	(12,289	)	$	(107	)	$	(12,182	)
Proceeds from the distribution reinvestment plan, net of shares repurchased		2,142			2,433			(291	)
Distributions paid		(10,841	)		(22,666	)		11,825
Net cash used in financing activities	$	(20,988	)	$	(20,340	)	$	(648	)

During the six months ended June 30, 2020, cash used by debt increased $12.2 million from the six months ended June 30, 2019, primarily due to net paydowns on the credit facility of $12.0 million in 2020.  During the six months ended June 30, 2020 and 2019, we generated proceeds from the sale of shares pursuant to the DRP of $4.5 million and $10.3 million, respectively.  For the six months ended June 30, 2020 and 2019, share repurchases were $2.4 million and $7.9 million, respectively. During the six months ended June 30, 2020 and 2019, we paid $10.8 million and $22.7 million, respectively, in distributions. The decreases in distributions paid, proceeds from DRP and share repurchases in 2020 compared to 2019 is due to the suspensions of the authorization and payment of distributions, the DRP and the SRP.

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Distributions

For 2020 and 2019, distributions were payable quarterly in arrears. A summary of the distributions declared, distributions paid and cash flows provided by operations for the six months ended June 30, 2020 and 2019 follows (Dollar amounts in thousands except per share amounts):

					Distributions Paid (2)
Six Months Ended June 30,	Distributions Declared (1)		Distributions Declared Per Share		Cash		Reinvested via DRP		Total		Cash Flows From Operations
2020	$	—	$	—	$	6,294	$	4,547	$	10,841	$	13,376
2019	$	21,513	$	0.6036	$	12,368	$	10,298	$	22,666	$	22,832

(1) The distribution declared during the first quarter of 2020 was rescinded during the second quarter.

(2) Distributions were funded by cash flow from operations and cash on hand during the six months ended June 30, 2020 and 2019.

Due to the uncertainty surrounding the COVID-19 pandemic and the need to preserve cash for the payment of operating and other fundamental expenses, such as debt payments, our board of directors rescinded the first quarter distribution and suspended distributions until further notice.

Results of Operations

The following discussions are based on our consolidated financial statements for the three and six months ended June 30, 2020 and 2019. Dollar amounts are stated in thousands.

This section describes and compares our results of operations for the three and six months ended June 30, 2020 and 2019. 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, which is a supplemental non-GAAP performance measure. A total of 44 investment properties that were acquired on or before January 1, 2019 represent our “same store” properties during the three and six months ended June 30, 2020 and 2019.  “Non-same store,” as reflected in the table below, consists of properties sold after January 1, 2019. For the three and six months ended June 30, 2020 and 2019, 15 properties that were sold constituted non-same store properties.

We believe that net operating income is useful to investors in measuring the operating performance of our property portfolio because our primary business is the ownership of real estate, and net operating income excludes various items included in GAAP net income that do not relate to, or are not indicative of, our operating performance, such as depreciation and amortization and parent-level corporate expenses (including general and administrative expenses).  Same store net operating income is useful because it eliminates differences in net operating income resulting from the acquisition or disposition of properties during the periods presented and therefore provides a better comparison of the operating performance of our properties between periods.

The following tables present the property net operating income prior to straight-line income (expense), net, amortization of intangibles, interest, and depreciation and amortization for the three and six months ended June 30, 2020 and 2019, along with a reconciliation to net loss, calculated in accordance with U.S. GAAP.

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Comparison of the three months ended June 30, 2020 and June 30, 2019

	Total									Same Store							Non-Same Store
	Three Months Ended June 30,									Three Months Ended June 30,							Three Months Ended June 30,
	2020			2019			Change			2020		2019		Change			2020		2019		Change
Rental income	$	25,449		$	30,728		$	(5,279	)	$	25,449	$	29,326	$	(3,877	)	$	—	$	1,402	$	(1,402	)
Other property income		53			69			(16	)		53		69		(16	)		—		—		—
Total income	$	25,502		$	30,797		$	(5,295	)	$	25,502	$	29,395	$	(3,893	)	$	—		1,402	$	(1,402	)
Property operating expenses	$	3,836		$	5,237		$	(1,401	)	$	3,836	$	5,124	$	(1,288	)	$	—		113	$	(113	)
Real estate tax expense		3,784			3,890			(106	)		3,784		3,601		183			—		289		(289	)
Total property operating expenses	$	7,620		$	9,127		$	(1,507	)	$	7,620	$	8,725	$	(1,105	)	$	—		402	$	(402	)
Property net operating income	$	17,882		$	21,670		$	(3,788	)	$	17,882	$	20,670	$	(2,788	)	$	—		1,000	$	(1,000	)
Straight-line income (expense), net	$	319		$	204		$	115
Amortization of intangibles and lease incentives		207			379			(172	)
General and administrative expenses		(1,447	)		(1,361	)		(86	)
Business management fee		(2,231	)		(2,335	)		104
Depreciation and amortization		(12,833	)		(14,089	)		1,256
Interest expense		(6,279	)		(7,170	)		891
Interest and other income		69			26			43
Net loss	$	(4,313	)	$	(2,676	)	$	(1,637	)

Net loss.  Net loss was $4,313 and $2,676 for the three months ended June 30, 2020 and 2019, respectively.

Total property net operating income.  On a “same store” basis, comparing the results of operations of investment properties owned during the three months ended June 30, 2020 with the results of the same investment properties owned during the three months ended June 30, 2019, property net operating income decreased $2,788, total property income decreased $3,893, and total property operating expenses including real estate tax expense decreased $1,105.

The decrease in “same store” total property income is primarily due to an increase in bad debt during the three months ended June 30, 2020, primarily caused by the COVID-19 pandemic.

“Non-same store” total property net operating income decreased $1,000 during 2020 as compared to 2019. The decrease was due to 12 properties sold in the fourth quarter of 2019 and an additional three properties sold during the first quarter of 2020. On a “non-same store” basis, total property income decreased $1,402 and total property operating expenses decreased $402 during the three months ended June 30, 2020.

Straight-line income (expense), net. Straight-line income (expense), net increased $115 in 2020 compared to 2019. This increase is primarily due to an increase in rent abatements during the three months ended June 30, 2020.   

Amortization of intangibles and lease incentives.  Income from the amortization of intangibles and lease incentives decreased $172 in 2020 compared to 2019. The increase is primarily attributable to higher below market lease intangible write-offs during the second quarter of 2019 due to early tenant move-outs.

General and administrative expenses.  General and administrative expenses increased $86 in 2020 compared to 2019.  This increase is primarily due to higher legal expenses for the three months ended June 30, 2020.

Business management fee.  Business management fees decreased $104 in 2020 compared to 2019. The decrease is primarily due to 15 properties sold since June 30, 2019, including 12 in the fourth quarter of 2019 and three during January 2020.

Depreciation and amortization.  Depreciation and amortization decreased $1,256 in 2020 compared to 2019. The decrease is primarily due to properties sold in the fourth quarter 2019 and January 2020 that are no longer depreciating.

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Interest expense. Interest expense decreased $891 in 2020 compared to 2019. The decrease is primarily due to lower average interest rates and a decrease in average debt outstanding in 2020 compared to 2019. 

Interest and other income.  Interest and other income increased $43 in 2020 compared to 2019.  The increase is primarily due to higher average cash balances in 2020.

Comparison of the six months ended June 30, 2020 and June 30, 2019

	Total									Same Store							Non-Same Store
	Six Months Ended June 30,									Six Months Ended June 30,							Six Months Ended June 30,
	2020			2019			Change			2020		2019		Change			2020		2019		Change
Rental income	$	55,438		$	62,533		$	(7,095	)	$	55,254	$	59,705	$	(4,451	)	$	184	$	2,828	$	(2,644	)
Other property income		114			122			(8	)		114		122		(8	)		—		—		-
Total income	$	55,552		$	62,655		$	(7,103	)	$	55,368	$	59,827	$	(4,459	)	$	184	$	2,828	$	(2,644	)
Property operating expenses	$	9,132		$	10,711		$	(1,579	)	$	9,095	$	10,421	$	(1,326	)	$	37		290	$	(253	)
Real estate tax expense		7,422			8,138			(716	)		7,384		7,534		(150	)		38		604		(566	)
Total property operating expenses	$	16,554		$	18,849		$	(2,295	)	$	16,479	$	17,955	$	(1,476	)	$	75	$	894	$	(819	)
Property net operating income	$	38,998		$	43,806		$	(4,808	)	$	38,889	$	41,872	$	(2,983	)	$	109	$	1,934	$	(1,825	)
Straight-line income (expense), net	$	257		$	424		$	(167	)
Intangible amortization and inducement		779			575			204
General and administrative expenses		(2,687	)		(2,873	)		186
Business management fee		(4,460	)		(4,668	)		208
Depreciation and amortization		(26,137	)		(28,615	)		2,478
Interest expense		(12,777	)		(14,323	)		1,546
Interest and other income		93			45			48
Net loss	$	(5,934	)	$	(5,629	)	$	(305	)

Net loss.  Net loss was $5,934 and $5,629 for the six months ended June 30, 2020 and 2019, respectively.

Total property net operating income.  On a “same store” basis, comparing the results of operations of investment properties owned during the six months ended June 30, 2020 with the results of the same investment properties owned during the six months ended June 30, 2019, property net operating income decreased $2,983, total property income decreased $4,459, and total property operating expenses including real estate tax expense decreased $1,476.

The decrease in “same store” total property income is primarily due to an increase in bad debt during the six months ended June 30, 2020 primarily caused by the COVID-19 pandemic.

“Non-same store” total property net operating income decreased $1,825 during 2020 as compared to 2019. The decrease was due to 12 properties sold in the fourth quarter of 2019 and an additional three properties sold during the first quarter of 2020. On a “non-same store” basis, total property income decreased $2,644 and total property operating expenses decreased $819 during the six months ended June 30, 2020.

Straight-line income (expense), net. Straight-line income (expense), net decreased $167 in 2020 compared to 2019. This decrease is primarily due to greater write-offs during the six months ended June 30, 2020.

Amortization of intangibles and lease incentives.  Income from the amortization of intangibles and lease incentives increased $204 in 2020 compared to 2019. The increase is primarily attributable to higher below market lease intangible write-offs during 2020 due to early tenant move-outs.

General and administrative expenses.  General and administrative expenses decreased $186 in 2020 compared to 2019.  This decrease is primarily due to lower stock administration and conference costs and a reduction in state tax expense compared to 2019 .

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Business management fee.  Business management fees decreased $208 in 2020 compared to 2019. The decrease is primarily due to 15 properties sold since June 30, 2019, including 12 in the fourth quarter of 2019 and three during January 2020.

Depreciation and amortization.  Depreciation and amortization decreased $2,478 in 2020 compared to 2019. The decrease is primarily due to properties sold in the fourth quarter 2019 and January 2020 that are no longer depreciating.

Interest expense. Interest expense decreased $1,546 in 2020 compared to 2019. The decrease is primarily due to lower average interest rates and a decrease in average debt outstanding in 2020 compared to 2019. 

Interest and other income.  Interest and other income increased $48 in 2020 compared to 2019.  The increase is primarily due to higher average cash balances in 2020.

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, 2019, as filed with the Securities and Exchange Commission on March 18, 2020, under the heading “Critical Accounting Policies.” We are adding one critical accounting policy during the six months ended June 30, 2020 for collectability of accounts and rents receivable.

We make estimates and take into consideration certain factors that require judgments to be made as to the collectability of accounts and rents receivable. Collectability factors taken into consideration are the amounts outstanding, tenant credit worthiness, current economic trends and payment history of the tenant. We include both billed and accrued charges in our evaluation of the collectability of a tenant’s receivable balance. For tenant receivables that are considered not probable of being collected, we record an offset for uncollectable tenant revenues directly to rental income. Although we estimate uncollectible receivables and provide for them through a direct write-off against rental income, actual experience may differ from those estimates.

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.

Leasing Activity

The following table sets forth leasing activity during the six months ended June 30, 2020. 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		20		136,398	$	17.59	$	17.36		1.3	%		4.1	$	0.59
Comparable New Leases		1		4,016	$	28.00	$	26.80		4.5	%		6.0	$	22.50
Non-Comparable New and Renewal Leases (a)		20		126,074	$	14.58	N/A		N/A				3.9	$	11.95
Total		41		266,488

(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

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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 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.

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Our FFO and MFFO for the six months ended June 30, 2020 and 2019 are calculated as follows:

		Six Months Ended June 30,
		2020			2019
		(Dollar amounts in thousands)
	Net loss	$	(5,934	)	$	(5,629	)
Add:	Depreciation and amortization related to investment properties		26,137			28,615
	Funds from operations (FFO)		20,203			22,986
Less:	Amortization of acquired market lease intangibles, net		(828	)		(600	)
	Straight-line income (expense), net		(257	)		(424	)
	Modified funds from operations (MFFO)	$	19,118		$	21,962

Subsequent Events

For information related to subsequent events, reference is made to Note 15 – “Subsequent Events” which is included in our June 30, 2020 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 June 30, 2020, we had outstanding debt of $671.6 million, excluding mortgage premium and unamortized debt issuance costs, bearing interest rates ranging from 1.77% to 5.48% per annum. The weighted average interest rate was 3.53%, which includes the effect of interest rate swaps. As of June 30, 2020, the weighted average years to maturity for our mortgages and credit facility payable was 3.0 years.

As of June 30, 2020, our fixed-rate debt consisted of secured mortgage financings with a carrying value of $163.9 million and a fair value of $177.3 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 $6.6 million at June 30, 2020. If market interest rates were to decrease by 1% (100 basis points), the fair market value of our fixed-rate debt would increase by $6.9 million at June 30, 2020.

As of June 30, 2020, we had $105.7 million of debt or 15.7% 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 1.83% per annum. We had variable rate debt subject to swap agreements of $402.1 million, or 59.9% of our total debt, excluding mortgage premium and unamortized debt issuance costs, at June 30, 2020.

If interest rates on all debt which bears interest at variable rates as of June 30, 2020 increased by 1% (100 basis points), the increase in interest expense on all debt would decrease earnings and cash flows by $1.1 million annually. If interest rates on all debt which bears interest at variable rates as of June 30, 2020 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

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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 7 – “Debt and Derivative Instruments” which is included in our June 30, 2020 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 June 30, 2020 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.

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, 2019 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020:

The outbreak of the novel coronavirus (COVID-19) continues to spread in various locations throughout the U.S., and its impacts are uncertain and hard to measure, but it has already had material adverse effects on our business, and these effects may continue and may worsen, depending in part on the severity and duration of the pandemic in the U.S. and its immediate and lingering economic effects.

The continued spread of the COVID-19 pandemic globally has had, and could have a significantly greater, material adverse effect on the global and U.S. economies as a whole, as well as the states and cities where we own properties in particular, leading to significant adverse impacts on economic activity as well as significant volatility and lack of liquidity in financial markets, including commercial lending markets.

A sustained downturn in the U.S. economy and reduced consumer spending, including reduced consumer activity at brick-and-mortar commercial establishments, due to the prolonged existence and threat of the COVID-19 pandemic has caused an economic recession in the U.S. that has negatively impacted, and could further impact, the ability and willingness of many of our tenants to pay their rent when due. Our ability to lease space and negotiate and maintain favorable rents is also likely to be negatively impacted by a prolonged recession in the U.S. economy, which would result in a decline in our occupancy percentage and reduction in rental revenues as tenants default and leases expire over time.

Because substantially all of our income is derived from rentals of commercial real property, our business, income, cash flow, results of operations, financial condition, liquidity and ability to comply with the terms of, draw upon or increase the size of our Credit Facility, prospects and ability to service our debt obligations, our ability to consummate future property acquisitions and our ability to pay future distributions to our stockholders would be materially adversely affected if a significant number of tenants continue to be unable

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to meet their obligations to us. Also, there is no assurance that we will be able to refinance maturing debt on terms and conditions acceptable to us.

The impact of the COVID-19 pandemic has been rapidly evolving and is ever-changing. The coronavirus outbreak is negatively impacting almost every industry directly or indirectly, particularly the travel, hotel and retail industries, and businesses that rely on or require close personal contact, such as live entertainment venues, gyms and exercise facilities, health and wellness service providers and beauty salons, restaurants and bars. Many of our tenants have been required by the local, state or federal authorities to cease or limit operations thereby preventing them from generating revenue. Our tenants rely on retail customers and many of their businesses require close personal contact. Even if not prevented by the local, state or federal authorities, concern regarding the transmission of COVID-19 has impacted, and will likely continue to impact, the willingness of persons to engage in in-person commerce which will likely further result in reductions in customer foot traffic and reduced demand for our tenants’ products and services and may diminish the demand for space and the corresponding amounts of rent we can obtain for our properties and harm our tenants’ ability or willingness to pay us rent. As of August 10, 2020, many tenants are operating in a materially reduced capacity. As of August 10, 2020, rents collected as a percentage of billings, applying cash received to the billed amounts outstanding longest, were 81% in April, 76% in May, 74% in June, and 87% in July. In addition, tenants representing 59% of our portfolio, as measured by annualized base rent, have requested short-term rent relief, and we have finalized payment plans with tenants representing 40% of ABR. Rent deferrals will reduce our cash available to pay operating expenses and service our debt obligations. When the deferred rent becomes due, our tenants will be required to pay these deferred rent amounts in addition to the regular rent due, which may be difficult or impossible for tenants whose businesses have not recovered to pre-pandemic levels or are otherwise not performing well. Any rent forgiveness would further reduce our available cash.

Enforcing our rights as landlord against tenants who fail to pay rent or otherwise do not comply with the terms of their leases may be costly and may consume valuable time and resources, and even if we obtain a judgment, tenants that have been severely impacted may not be able to pay us what we are owed. Our ability to recover amounts under the terms of our leases may further be restricted or delayed due to moratoriums imposed by various jurisdictions in light of the COVID-19 pandemic on landlord-initiated commercial eviction and collection actions. If any of our tenants, or any guarantor of a tenant’s lease obligations, files for bankruptcy, we could be further adversely affected due to loss of revenue but also because the bankruptcy may also make it more difficult for us to lease the remainder of the property or properties in which the bankrupt tenant operates. Further, certain of our tenants may not be eligible for or may not be successful in securing stimulus funds under the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) or other government aid programs and there is no assurance they will pay rent even if they qualify.  

As referenced above, a decrease in demand for in-person retail businesses could make it difficult for us to renew or re-lease our properties at lease rates equal to or above historical rates and we could incur significant re-leasing costs and the re-leasing process with respect to both anticipated and unanticipated vacancies could take longer. Some tenants that have been forced to close or whose customers and potential customers change their habits in light of the coronavirus, e.g., by shopping more online, may not re-open even after the aforementioned restrictions are lifted, which could have a material impact on occupancy at our properties and may continue to materially impact our results. To the extent that unemployment remains high and government assistance decreases significantly from recent levels, for example, if unemployment assistance provided by the U.S. government is decreased or discontinued, retail consumer spending may correspondingly decrease, and our tenants may be materially adversely affected and forced to close. Two of our top 30 tenants by ABR (nos. 18 (Ascena Retail Group) and 29 (JCPenney)) have filed for Chapter 11 bankruptcy protection, and  a third, Bed Bath & Beyond (no. 23) has publicly announced that it is closing 200 of its stores and has initiated discussions with us regarding its locations at three of our centers that may result in rent reductions, term extensions or store closures. Even if co-tenancy rights do not exist at centers affected by anchor store closings, other tenants may experience downturns in their businesses that could further threaten their ongoing ability to continue paying rent and remain solvent.

Additionally, many manufacturers of goods and suppliers and processors of food in many countries have been completely or partially shut down or are not able to function at full capacity in an attempt to curb the spread of the illness, which could lead to temporary or long-term disruptions in supply chains and may also impact the operations of our tenants, further impacting their revenues and ability to pay rent when due.

The business and operating results of our tenants may also be negatively impacted if the outbreak of the coronavirus occurs within their respective workforces or otherwise disrupts their management and other personnel, their supply chains or their ability to operate their businesses. Many companies have implemented policies and procedures designed to protect against the introduction of the coronavirus to the workforce, including permitting or requiring personnel to work offsite, among others. These changes in the work processes of our tenants could lead to disruptions, such as a reduced ability to effectively transact with customers and colleagues and a loss of IT system functionality due to unusual or excess burdens on IT infrastructures.

We rely on the Business Manager to manage our day-to-day operations. Non-essential businesses were previously closed and are subject to limited operations in Illinois per the order of the Governor of Illinois, including our corporate headquarters in Oak Brook. Though many people are able to work remotely, the business and operations of our Business Manager and its affiliates may also be adversely impacted by the coronavirus outbreak, including illness or quarantine of members of its workforce, which may negatively impact its ability to provide us services to the same degree as it had prior to the outbreak and may adversely affect our financial

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reporting systems and internal controls and procedures and increase vulnerability to security breaches, information technology disruptions and other similar events.

The extent to which the COVID-19 pandemic, or a future pandemic, impacts our operations and those of our tenants will depend on future developments, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others, which are highly uncertain and cannot be predicted with confidence but could be material. The situation is ever-changing, and additional impacts to the business may arise that we are not aware of currently. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic, but a prolonged outbreak as well as related mitigation efforts could continue to have a material impact on the cash rents that we are able to collect and would materially and adversely affect our business, results of operations and financial condition.

Many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic, including but not limited to risk factors related to the economy, competition (including e-commerce and online sales), leasing, debt financing, tenant bankruptcies, distributions, share repurchases, and anchor tenants. We have suspended distributions, distribution reinvestments under our DRP, and share repurchases under our share repurchase program, and we cannot provide any assurance as to when they will be restarted, if at all.  

The strategic plan adopted by our board of directors on February 11, 2019, may evolve or change over time, particularly in light of the COVID-19 pandemic, and there is no assurance we will be able to successfully achieve our board’s objectives under the strategic plan, including listing our common stock, within the timeframe we expect or would prefer or at all.

The financial covenants under our credit agreement may restrict our ability to make distributions and our operating and acquisition activities. Due to the current level of operations of our tenants as a result of the COVID-19 pandemic there is a risk that we will breach the Consolidated Tangible Net Worth covenant in our credit agreement, and any breach of a financial covenant such as the Consolidated Tangible Net Worth covenant would be a default under the credit agreement, unless the lenders under our credit agreement agree to a waiver or modification of that agreement, which default 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 (the “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. At July 31, 2020, we had $255 million outstanding of the $350 million available under the Credit Facility. Our availability under the Credit Facility was $95 million as of July 31, 2020, subject to the terms and conditions, including compliance with the covenants, of the Amended and Restated Credit Agreement that governs the Credit Facility.  Although $95 million is available, a substantially lesser amount may be available to be drawn over the next twelve months due to covenant limitations, particularly maximum corporate leverage.

The credit agreement requires compliance with certain financial covenants, including, among other conditions, a Consolidated Tangible Net Worth requirement, restrictions on indebtedness, a distribution limitation and other material covenants. Compliance with 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 Funds from Operations, or “FFO,” excluding acquisition expenses, or “adjusted FFO,” for that period.  

The credit agreement provides for several customary events of default, including, among other things, the failure to comply with our covenants, such as the Consolidated  Tangible Net Worth covenant, and the failure to pay when amounts outstanding under the credit agreement become due. Due to the current level of operations of our tenants as a result of the COVID-19 pandemic, and based on certain assumptions related to tenant bankruptcies and bad debt expense in our projections beginning with the third quarter 2020 results of operations, we have initiated discussions with our lenders to negotiate a waiver of any possible covenant default, should such a waiver be required, or a modification of our Credit Facility related to the Consolidated Tangible Net Worth covenant. There can be no assurance that we will be able to obtain a waiver or modification of our Credit Facility in a timely manner or on acceptable terms, if at all. Defaults 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.

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

Recent Sales of Unregistered Equity Securities

On June 16, 2020, we issued4,408 restricted shares to our independent directors pursuant to our Employee and Director Restricted Share Plan ("RSP"). These restricted share awards will vest in equal installments of 33-1/3% on each of June 16, 2021, 2022 and 2023, with full acceleration of vesting upon our consummation of certain liquidity events as set forth in the RSP or termination of the independent director's service to the Company by reason of death or disability and applicable terms of the grant. No sales commissions or other consideration was paid in connection with the issuances, which were made without registration under the Securities Act in reliance upon the exemption from registration set forth in Section 4(a)(2) of 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. The SRP may be amended or terminated in our sole discretion. In the case of repurchases made upon the death of a stockholder or qualifying disability (“Exceptional Repurchases”), 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, our board of directors adopted a second amended and restated SRP, effective March 21, 2019. On March 3, 2020 our board of directors adopted a third amended and restated SRP (the “Third A&R SRP”).

Under the Third A&R SRP, we are authorized to make ordinary repurchases and Exceptional Repurchases at a price equal to 80.0% of the “share price,” which is defined in the Third 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 us at a discounted price; or (B) the most recently disclosed estimated value per share. Prior to the amendment, we were authorized to make Exceptional Repurchases at a price equal to 100% of the “share price.”

The Third 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.  As our board of directors has suspended the SRP, as discussed below, the current effective funding limit is irrelevant, and in any case there have been no net proceeds from the DRP, which has also been suspended. 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.

When the SRP is reinstated, 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 Exceptional Repurchases and (b) second, all ordinary repurchases. The Third 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. For any quarter ended, unfulfilled repurchase requests will be included in the list of requests for the following quarter unless the request is withdrawn in accordance with the SRP. However, each stockholder who has submitted a repurchase request must submit an acknowledgment annually after we publish a new estimated value per share acknowledging, among other things, that the stockholder wishes to maintain the request. If we do not receive the acknowledgment prior to the repurchase date, we will deem the request to have been withdrawn.

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.

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Due to the uncertainty surrounding the COVID-19 pandemic and the need to preserve cash for the payment of operating and other fundamental expenses, such as debt payments, in this environment, our board of directors has suspended our SRP until further notice. The suspension of the SRP was effective on June 26, 2020. Any unfulfilled repurchase requests will automatically roll over for processing under the terms and conditions of the SRP when we restart the plan, unless a stockholder withdraws the request for repurchase.

The table below sets forth the number of shares we repurchased pursuant to our SRP during the three months ended June 30, 2020.

(Dollar amounts in thousands, except per share amounts)

Period	Total Shares Requested to be Repurchased		Total Number of Shares Repurchased(1)		Average Price Paid per Share		Amount of Shares Repurchased		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(2)		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
April 2020		—		—	$	—	$	—		—		1,784,982
May 2020		—		—		—		—		—		1,784,982
June 2020		201,243		1,743		14.52		25		—		1,783,239
Total		201,243		1,743	$	14.52	$	25		—

(1) 1,743 shares of our common stock were sold to us pursuant to a Final Order of Forfeiture entered by a U.S. district court against the holders of the account.

(2) Our SRP was announced on October 18, 2012.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not Applicable.

Item 5.  Other Information

Not Applicable.

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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 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.

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	Third Amended and Restated Share Repurchase Program effective April 10, 2020 (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 March 5, 2020 (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 June 30, 2020, filed with the Securities and Exchange Commission on August 14, 2020 is formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Loss; (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:	August 14, 2020
	/s/ Catherine L. Lynch
By:	Catherine L. Lynch
	Chief Financial Officer and Treasurer (principal financial officer)
Date:	August 14, 2020

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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:	August 14, 2020

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:	August 14, 2020

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 June 30, 2020, 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: August 14, 2020	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 June 30, 2020, 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: August 14, 2020	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.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 13, 2020
Cover [Abstract]
Entity Registrant Name	Inland Real Estate Income Trust, Inc.
Entity Central Index Key	0001528985
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
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		36,020,345
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity File Number	000-55146
Entity Tax Identification Number	45-3079597
Entity Address, Address Line One	2901 Butterfield Road
Entity Address, City or Town	Oak Brook
Entity Address, State or Province	IL
Entity Address, Country	US
Entity Incorporation, State or Country Code	MD
Entity Address, Postal Zip Code	60523
City Area Code	630
Local Phone Number	218-8000
Document Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Investment properties held and used:
Land	$ 267,946	$ 267,946
Building and other improvements	985,616	983,923
Total	1,253,562	1,251,869
Less accumulated depreciation	(189,052)	(170,269)
Net investment properties held and used	1,064,510	1,081,600
Investment properties and related assets held for sale		38,752
Cash and cash equivalents	31,624	4,516
Restricted cash	1,073	1,017
Accounts and rent receivable, net	22,974	17,231
Acquired lease intangible assets, net	80,790	89,352
Operating lease right-of-use asset, net	15,243	15,478
Other assets	4,685	6,613
Total assets	1,220,899	1,254,559
Liabilities:
Mortgages and credit facility payable, net	669,328	681,327
Accounts payable and accrued expenses	9,446	7,951
Operating lease liability	23,863	23,696
Distributions payable		10,841
Acquired intangible liabilities, net	44,463	46,820
Due to related parties	2,773	5,023
Liabilities associated with investment properties held for sale		1,716
Other liabilities	26,499	16,666
Total liabilities	776,372	794,040
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, 36,020,345 and 35,799,388 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	36	36
Additional paid in capital	810,173	805,722
Accumulated distributions and net loss	(344,265)	(338,331)
Accumulated other comprehensive loss	(21,417)	(6,908)
Total stockholders’ equity	444,527	460,519
Total liabilities and stockholders’ equity	$ 1,220,899	$ 1,254,559

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
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	36,020,345	35,799,388
Common stock, shares outstanding	36,020,345	35,799,388

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income:
Rental income	$ 26,176	$ 31,512	$ 56,876	$ 63,934
Other property income	53	69	114	122
Total income	26,229	31,581	56,990	64,056
Cost and Expenses:
Property operating expenses	4,037	5,438	9,534	11,113
Real estate tax expense	3,784	3,890	7,422	8,138
General and administrative expenses	1,447	1,361	2,687	2,873
Business management fee	2,231	2,335	4,460	4,668
Depreciation and amortization	12,833	14,089	26,137	28,615
Total expenses	24,332	27,113	50,240	55,407
Other Income (Expense):
Interest expense	(6,279)	(7,170)	(12,777)	(14,323)
Interest and other income	69	26	93	45
Net loss	$ (4,313)	$ (2,676)	$ (5,934)	$ (5,629)
Net loss per common share, basic and diluted	$ (0.12)	$ (0.07)	$ (0.16)	$ (0.16)
Weighted average number of common shares outstanding, basic and diluted	36,020,150	35,686,902	36,019,771	35,635,436
Comprehensive loss:
Net loss	$ (4,313)	$ (2,676)	$ (5,934)	$ (5,629)
Unrealized loss on derivatives	(1,930)	(7,206)	(16,482)	(11,406)
Reclassification adjustment for amounts included in net loss	1,570	(443)	1,973	(897)
Comprehensive loss	$ (4,673)	$ (10,325)	$ (20,443)	$ (17,932)

XML

CONSOLIDATED STATEMENTS 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 (Loss) [Member]
Balance at Dec. 31, 2018	$ 517,078	$ 35	$ 795,409	$ (283,859)	$ 5,493
Balance, shares at Dec. 31, 2018		35,343,256
Distributions declared	(21,513)			(21,513)
Proceeds from distribution reinvestment plan	10,298	$ 1	10,297
Proceeds from distribution reinvestment plan, shares		484,748
Shares repurchased	(4,765)		(4,765)
Shares repurchased, shares		(257,740)
Unrealized loss on derivatives	(11,406)				(11,406)
Reclassification adjustment for amounts included in net loss	(763)				(763)
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	26		26
Equity based compensation, shares		1,445
Net loss	(5,629)			(5,629)
Balance at Jun. 30, 2019	483,302	$ 36	800,967	(310,891)	(6,810)
Balance, shares at Jun. 30, 2019		35,571,709
Balance at Mar. 31, 2019	501,914	$ 35	798,483	(297,443)	839
Balance, shares at Mar. 31, 2019		35,447,385
Distributions declared	(10,772)			(10,772)
Proceeds from distribution reinvestment plan	4,835	$ 1	4,834
Proceeds from distribution reinvestment plan, shares		240,331
Shares repurchased	(2,363)		(2,363)
Shares repurchased, shares		(117,452)
Unrealized loss on derivatives	(7,206)				(7,206)
Reclassification adjustment for amounts included in net loss	(443)				(443)
Equity-based compensation	13		13
Equity based compensation, shares		1,445
Net loss	(2,676)			(2,676)
Balance at Jun. 30, 2019	483,302	$ 36	800,967	(310,891)	(6,810)
Balance, shares at Jun. 30, 2019		35,571,709
Balance at Dec. 31, 2019	$ 460,519	$ 36	805,722	(338,331)	(6,908)
Balance, shares at Dec. 31, 2019	35,799,388	35,799,388
Distributions declared	$ (8,173)			(8,173)
Rescission of Q1 2020 distribution (See Note 8)	8,173			8,173
Proceeds from distribution reinvestment plan	4,547		4,547
Proceeds from distribution reinvestment plan, shares		225,940
Shares repurchased	(127)		(127)
Shares repurchased, shares		(6,730)
Unrealized loss on derivatives	(16,482)				(16,482)
Reclassification adjustment for amounts included in net loss	1,973				1,973
Equity-based compensation	31		31
Equity based compensation, shares		1,747
Net loss	(5,934)			(5,934)
Balance at Jun. 30, 2020	$ 444,527	$ 36	810,173	(344,265)	(21,417)
Balance, shares at Jun. 30, 2020	36,020,345	36,020,345
Balance at Mar. 31, 2020	$ 441,036	$ 36	810,182	(348,125)	(21,057)
Balance, shares at Mar. 31, 2020		36,020,341
Rescission of Q1 2020 distribution (See Note 8)	8,173			8,173
Shares repurchased	(25)		(25)
Shares repurchased, shares		(1,743)
Unrealized loss on derivatives	(1,930)				(1,930)
Reclassification adjustment for amounts included in net loss	1,570				1,570
Equity-based compensation	16		16
Equity based compensation, shares		1,747
Net loss	(4,313)			(4,313)
Balance at Jun. 30, 2020	$ 444,527	$ 36	$ 810,173	$ (344,265)	$ (21,417)
Balance, shares at Jun. 30, 2020	36,020,345	36,020,345

XML

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement Of Stockholders Equity [Abstract]
Distributions declared per share	$ 0.3018	$ 0.226875	$ 0.6036

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net loss	$ (5,934)	$ (5,629)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26,137	28,615
Amortization of debt issuance costs and mortgage premiums, net	290	302
Amortization of acquired market leases, net	(828)	(600)
Amortization of equity-based compensation	31	26
Reduction in the carrying amount of the right-of-use-asset	235	245
Straight-line income, net	(659)	(826)
Other non-cash adjustments	7	9
Changes in assets and liabilities:
Accounts payable and accrued expenses	1,383	1,125
Accounts and rent receivable	(4,391)	594
Due to related parties	(2,260)	88
Operating lease liability	167	157
Other liabilities	(1,105)	(1,304)
Other assets	303	30
Net cash flows provided by operating activities	13,376	22,832
Cash flows from investing activities:
Capital expenditures	(2,479)	(3,833)
Proceeds from sale of investment properties	37,255
Net cash flows provided by (used in) investing activities	34,776	(3,833)
Cash flows from financing activities:
Payment of credit facility	(43,022)
Proceeds from credit facility	31,000
Payment of mortgages payable	(267)	(107)
Proceeds from the distribution reinvestment plan	4,547	10,298
Shares repurchased	(2,405)	(7,865)
Distributions paid	(10,841)	(22,666)
Net cash flows used in financing activities	(20,988)	(20,340)
Net increase (decrease) in cash, cash equivalents and restricted cash	27,164	(1,341)
Cash, cash equivalents and restricted cash, at beginning of the period	5,533	16,240
Cash, cash equivalents and restricted cash, at end of period	32,697	14,899
Supplemental disclosure of cash flow information:
Cash paid for interest	12,515	13,360
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 capital expenditures	$ 72	353
Accrued share repurchase program liability		2,363
Distributions payable		$ 10,772

XML

Organization

6 Months Ended

Jun. 30, 2020

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 is primarily focused on owning retail properties and targets 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 have completed the sale of 15 properties, including the sale of three properties during January 2020, as further described in Note 4 – “Dispositions,” with the goal of redeploying capital into the acquisition of strategically located grocery-anchored centers. The Company plans to move toward a liquidity event in the future, market conditions permitting, most likely through a listing on a public securities exchange.

In connection with the Strategic Plan, the Company’s share repurchase program (as amended, the “SRP”) was amended and restated, effective March 21, 2019, 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. On March 3, 2020, the Company’s SRP was further amended and restated (the “Third A&R SRP”), which became effective on April 10, 2020, as further described below in Note 3 – “Equity”. The Strategic Plan may evolve or change over time. For example, the Company may decide to focus more on redeveloping existing properties relative to investing in new grocery-anchored centers, depending on such factors, including, but not limited to, market prices for its properties, availability of capital for redevelopment and construction costs. There is no assurance, particularly in light of the COVID-19 pandemic, that the Company will be able to successfully implement the Strategic Plan, including listing the Company’s common stock, within the timeframe we would expect or would prefer or at all.

On March 3, 2020, as reported in the Company’s Form 8-K filed with the Securities and Exchange Commission on March 5, 2020, 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, 2019; (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 that was expected April 2020 until the Company announces a new Estimated Per Share NAV, and (iii) that, in accordance with the SRP, beginning with repurchases that were expected in April 2020 and until the Company announces a new Estimated Per Share NAV, any shares accepted for ordinary repurchases and “exceptional repurchases” will be repurchased at 80% of the Estimated Per Share NAV.

Due to the uncertainty surrounding the COVID-19 pandemic and the need to preserve cash for the payment of operating and other fundamental expenses, such as debt payments, the Company’s board of directors has suspended distributions, rescinded the first quarter distribution that was previously declared and suspended the Company’s DRP and SRP until further notice. The suspension of the DRP was effective on June 6, 2020 and the suspension of the SRP was effective on June 26, 2020. Any unfulfilled repurchase requests will automatically roll over for processing under the terms and conditions of the SRP when the Company restarts the plan, unless a stockholder withdraws the request for repurchase.

At June 30, 2020, the Company owned 44 retail properties, totaling 6,470,347 square feet.  The properties are located in 21 states.  At June 30, 2020, the portfolio had a weighted average physical occupancy of 93.4% and economic occupancy of 94.0%.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

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, 2019, as filed with the Securities and Exchange Commission on March 18, 2020, under the heading Note 2 – “Summary of Significant Accounting Policies.” There have been no changes to the Company’s significant accounting policies during the six months ended June 30, 2020, 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.

Significant Risks and Uncertainties related to COVID-19 Pandemic

Currently, one of the most significant risks and uncertainties is the potential further adverse effect of the current pandemic of the novel coronavirus, or COVID-19. A number of our tenants had temporarily closed their stores and requested rent deferral or rent abatement during this pandemic. Many experts predict that the outbreak will trigger, or even has already triggered, a period of global economic slowdown or a global recession.

The COVID-19 pandemic has already had a material impact on the Company’s operations (See Note  5 – “Leases”) and could continue to have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to, the following:

• reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and has caused tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income;

• a prolonged economic recession in the U.S. would negatively impact the Company’s ability to lease space and negotiate and maintain favorable rents causing reductions in occupancy and rental income;

• the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and

• weaker economic conditions and defaults or failures by tenants to pay rent when due could cause us to recognize impairment in value of our tangible or intangible assets.

The extent to which the COVID-19 pandemic impacts the Company’s operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

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 its consolidated statements 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.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of the effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A grants relief to entities, allowing them an election to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. An entity that makes this election can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company has elected to apply such relief and will avail itself of the election to avoid performing a lease by lease analysis.

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:

	June 30,
	2020		2019
Cash and cash equivalents	$	31,624	$	13,897
Restricted cash		1,073		1,002
Total cash, cash equivalents, and restricted cash	$	32,697	$	14,899

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”). The Company’s investment in Mainstreet JV was held through a taxable REIT subsidiary. The TRS is expected to report both capital and net operating losses relating to its joint venture in its 2019 tax return. 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 this investment 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

6 Months Ended

Jun. 30, 2020

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 sold 33,534,022 shares of common stock generating gross proceeds of $834,399 from the Offering.  As of June 30, 2020, there were 36,020,345 shares of common stock outstanding including 5,574,215 shares issued through the DRP, net of 3,092,634 shares repurchased through the SRP.    

On March 3, 2020, the Company’s board of directors determined the Estimated Per Share NAV as of December 31, 2019. The previously Estimated Per Share NAV as of December 31, 2018 was established on March 5, 2019.

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 $4,835 for the three months ended June 30, 2019. There were no distributions reinvested through the DRP during the three months ended June 30, 2020 due to the suspension of the DRP discussed in Note 1 – “Organization.” Distributions reinvested through the DRP were $4,547 and $10,298 for the six months ended June 30, 2020 and 2019, 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. The SRP may be amended or terminated at the Company’s sole discretion. In the case of repurchases made upon the death of a stockholder or qualifying disability (“Exceptional Repurchases”), as defined in the SRP, the one year holding period does not apply. On February 11, 2019, the Company’s board of directors adopted a second amended and restated SRP, effective March 21, 2019, which reduced the price the Company was authorized to make ordinary repurchases from a range of 92.5% to 100% of the “share price” down to 80% of the “share price.” The “share price” is defined in the second amended and restated 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. On March 3, 2020 the Company’s board of directors adopted the Third A&R SRP. Under the Third A&R SRP, the Company is authorized to make ordinary repurchases and Exceptional Repurchases at a price equal to 80.0% of the “share price,” which is defined in the Third A&R SRP the same way as described above for the second amended and restated SRP. Prior to the amendment, the Company was authorized to make Exceptional Repurchases at a price equal to 100% of the “share price.”

The Third A&R SRP provides the Company’s board of directors with the discretion to reduce the funding limit for share repurchases. The Third 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.  As the Company’s board of directors has suspended the SRP, there is no current effective funding limit based on % of the net proceeds from the DRP. See Note 1 – “Organization” for further discussion on the suspension of the SRP. 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 Exceptional Repurchases 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 discretion, may, at any time, amend, suspend or terminate the SRP.

Repurchases through the SRP were $25 and $2,363 for the three months ended June 30, 2020 and 2019, respectively. Repurchases through the SRP were $127 and $4,765 for the six months ended June 30, 2020 and 2019, respectively. At December 31, 2019, the Company’s liability related to the SRP was $2,278, recorded in other liabilities on the Company’s consolidated balance sheet. There was no liability related to the SRP at June 30, 2020 due to the suspension of the SRP. See Note 1 – “Organization” for further discussion on the suspension of the SRP.

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Dispositions

6 Months Ended

Jun. 30, 2020

Assets Of Disposal Group Including Discontinued Operation [Abstract]

Dispositions

NOTE 4 – DISPOSITIONS

In connection with the Strategic Plan, the Company sold three properties in January 2020 that met the criteria to be classified as held for sale on the consolidated balance sheet at December 31, 2019. The criteria were met for these properties because, amongst other criteria, the Company had collected non-refundable earnest money from the buyer. The Company collected proceeds of $37,255 net of selling costs upon completion of the three sales.

The following table reflects the major components of the assets and liabilities associated with investment properties held for sale as of December 31, 2019:

	December 31, 2019
Investment properties and related assets held for sale:
Land	$	6,275
Building and other improvements		27,758
Accounts and rent receivable		1,167
Acquired lease intangible assets, net		3,337
Deferred costs, net		186
Other assets		29
Investment properties and related assets held for sale	$	38,752
Liabilities associated with investment properties held for sale:
Accounts payable and accrued expenses	$	691
Due to related parties		6
Acquired intangible liabilities, net		743
Other liabilities		276
Liabilities associated with investment properties held for sale	$	1,716

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Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

NOTE 5 – 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 17 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.

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 statements of operations and comprehensive loss.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Rental income - fixed payments	$	20,938	$	25,309	$	44,968	$	50,804
Rental income - variable payments (a)		5,005		5,811		11,080		12,530
Amortization of acquired market leases, net		233		392		828		600
Rental income	$	26,176	$	31,512	$	56,876	$	63,934

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

The Company is closely monitoring the impact of the COVID-19 pandemic on the collectability of lease payments. As of June 30, 2020, the Company’s accounts and rent receivable, net balance is $22,974, which is net of an allowance for bad debts of $3,627 and includes $4,477 of deferred rent receivable related to COVID-19 agreements negotiated with tenants. Such agreements generally allow tenants to defer the payment of a portion of rent with no substantive changes to the consideration in the original lease. Consistent with the guidance in the Lease Modification Q&A issued by the FASB, such deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its rent receivable as tenant payments accrue and continues to recognize rental income.

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Acquired Intangible Assets and Liabilities

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Acquired Intangible Assets and Liabilities

NOTE 6 – ACQUIRED INTANGIBLE ASSETS AND LIABILITIES

The following table summarizes the Company’s identified intangible assets and liabilities as of June 30, 2020 and December 31, 2019: 

	June 30, 2020			December 31, 2019
Intangible assets:
Acquired in-place lease value	$	156,918		$	160,214
Acquired above market lease value		45,742			45,783
Accumulated amortization		(121,870	)		(113,308	)
Less: Assets related to investment properties held for sale		—			(3,337	)
Acquired lease intangibles, net	$	80,790		$	89,352
Intangible liabilities:
Acquired below market lease value	$	70,260		$	71,153
Accumulated amortization		(25,797	)		(23,590	)
Less: Liabilities related to investment properties held for sale		—			(743	)
Acquired below market lease intangibles, net	$	44,463		$	46,820

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Amortization recorded as amortization expense:
Acquired in-place lease value	$	3,305		$	4,188		$	7,033		$	9,029
Amortization recorded as a (reduction) increase to rental income:
Acquired above market leases	$	(746	)	$	(846	)	$	(1,529	)	$	(1,750	)
Acquired below market leases		979			1,238			2,357			2,350
Net rental income increase	$	233		$	392		$	828		$	600

Estimated amortization of the respective intangible lease assets and liabilities as of June 30, 2020 for each of the five succeeding years and thereafter is as follows:  

	Acquired In-Place Leases		Above Market Leases		Below Market Leases
2020 (remainder of year)	$	5,941	$	1,491	$	1,891
2021		10,537		2,953		3,689
2022		7,898		2,664		3,456
2023		6,671		2,477		3,198
2024		5,664		2,308		3,021
Thereafter		18,691		13,495		29,208
Total	$	55,402	$	25,388	$	44,463

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Debt and Derivative Instruments

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt and Derivative Instruments

NOTE 7 – DEBT AND DERIVATIVE INSTRUMENTS

As of June 30, 2020 and December 31, 2019, the Company had the following mortgages and credit facility payable:

	June 30, 2020						December 31, 2019
Type of Debt	Principal Amount			Weighted Average Interest Rate			Principal Amount			Weighted Average Interest Rate
Fixed rate mortgages payable	$	163,876			4.25	%	$	163,986			4.25	%
Variable rate mortgages payable with swap agreements		252,087			3.33	%		252,244			3.33	%
Variable rate mortgages payable without swap agreements		684			1.77	%		684			3.29	%
Mortgages payable	$	416,647			3.69	%	$	416,914			3.69	%
Credit facility payable		255,000			3.27	%		267,022			3.92	%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$	671,647			3.53	%	$	683,936			3.78	%
Add: Unamortized mortgage premiums		735						1,051
Less: Unamortized debt issuance costs		(3,054	)					(3,660	)
Total debt	$	669,328					$	681,327

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 $671,647 and $683,936 as of June 30, 2020 and December 31, 2019, respectively, and its estimated fair value was $686,352 and $689,790 as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, scheduled principal payments and maturities on the Company’s debt were as follows:

	June 30, 2020
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgage Loans		Maturity of Credit Facility		Total
2020 (remainder of the year)	$	648	$	—	$	—	$	648
2021		1,532		82,740		—		84,272
2022		615		101,537		105,000		207,152
2023		326		91,230		150,000		241,556
2024		341		—		—		341
Thereafter		295		137,383		—		137,678
Total	$	3,757	$	412,890	$	255,000	$	671,647

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 subject to the terms and conditions, including compliance with the covenants, of the Amended and Restated Credit Agreement that governs the Credit Facility.

At June 30, 2020, the Company had $105,000 outstanding under the Revolving Credit Facility and $150,000 outstanding under the Term Loan.  At June 30, 2020 the interest rate on the Revolving Credit Facility and the Term Loan was 1.83% 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 June 30, 2020, the Company had $95,000 available for borrowing under the Revolving Credit Facility, subject to the terms and conditions, including compliance with the covenants, of the Amended and Restated Credit Agreement that governs the 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 June 30, 2020, there were 25 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.  As of June 30, 2020, 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 June 30, 2020, 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 June 30, 2020, the weighted average years to maturity for the Company’s mortgages payable was 3.2 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 June 30, 2020.

Date Entered	Effective Date	Maturity Date	Pay Fixed Rate (a)			Notional Amount		Fair Value at June 30, 2020
Liabilities
February 11, 2015	March 2, 2015	March 1, 2022		2.02	%		6,114		(192	)
April 7, 2015	April 7, 2015	April 7, 2022		1.74	%		49,244		(1,373	)
September 17, 2015	September 17, 2015	September 17, 2022		1.90	%		13,700		(534	)
October 2, 2015	November 1, 2015	November 1, 2022		1.79	%		13,100		(506	)
December 23, 2015	December 23, 2015	January 2, 2026		2.30	%		26,000		(2,811	)
January 25, 2016	February 1, 2016	February 1, 2021		1.40	%		38,000		(279	)
June 7, 2016	July 1, 2016	July 1, 2023		1.42	%		43,680		(1,677	)
July 21, 2016	August 1, 2016	August 1, 2023		1.30	%		47,550		(1,689	)
June 5, 2017	May 31, 2017	May 15, 2022		1.90	%		14,700		(485	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		60,000		(4,747	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(1,978	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(1,981	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		40,000		(3,165	)
						$	402,088	$	(21,417	)

(a)   Receive floating rate index based upon one-month LIBOR. At June 30, 2020, the one-month LIBOR was 0.16%.

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 for the three and six months ended June 30, 2020 and 2019.

	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2020			2019			2020			2019
Effective portion of derivatives	$	(1,930	)	$	(7,206	)	$	(16,482	)	$	(11,406	)
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$	1,570		$	(443	)	$	1,973		$	(897	)

The total amount of interest expense presented on the consolidated statements of operations and comprehensive loss was $6,279 and $7,170, for the three months ended June 30, 2020 and 2019, respectively. The total amount of interest expense presented on the consolidated statements of operations and comprehensive loss was $12,777 and $14,323 for the six months ended June 30, 2020 and 2019, respectively. The location of the net gain or loss reclassified into income from accumulated other comprehensive loss is reported in interest expense on the consolidated statements of operations and comprehensive loss. The amount that is expected to be reclassified from accumulated other comprehensive loss into income in the next twelve months is $7,451.

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Distributions

6 Months Ended

Jun. 30, 2020

Distributions [Abstract]

Distributions

NOTE 8 – DISTRIBUTIONS

Due to the uncertainty surrounding the COVID-19 pandemic and the need to preserve cash for the payment of operating and other fundamental expenses, during the second quarter the Company’s board of directors rescinded the first quarter distribution and suspended distributions until further notice.

In 2019, the Company declared quarterly distributions in the amount of $0.3018 per share, payable in arrears the following quarter.

The table below presents the distributions paid, declared and rescinded during the three and six months ended June 30, 2020 and 2019.

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Distributions paid	$	—		$	10,742	$	10,841		$	22,666
Distributions declared	$	—		$	10,772	$	8,173		$	21,513
Distributions rescinded	$	(8,173	)	$	—	$	(8,173	)	$	—

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Earnings (Loss) per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings (Loss) per Share

NOTE 9 – 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 and six months ended June 30, 2020, 6,892 shares and 6,667 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive. As a result of a net loss in the three and six months ended June 30, 2019, 4,648 shares and 4,381 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 10 – 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

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity-Based Compensation

NOTE 11 – 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 are 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 are included in common stock outstanding on the date of vesting. Restricted share units are included in common stock outstanding on the date they are transferred to the non-employee director or their beneficiary. 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 $16 and $31, in the aggregate, for the three and six months ended June 30, 2020, respectively. As of June 30, 2020, the Company had $105 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 1.8 years. The total fair value at the vesting date for restricted shares and restricted share units that vested during both the three and six months ended June 30, 2020 was $46. The total fair value at the vesting date for restricted shares and restricted share units that vested during both the three and six months ended June 30, 2019 was $39.

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

	Restricted Shares			Restricted Share Units
Outstanding at December 31, 2019		3,906			1,480
Granted (at grant date fair value of $18.15 per share)		4,408			—
Vested		(1,747	)		(760	)
Outstanding at June 30, 2020		6,567			720

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Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

NOTE 12 – SEGMENT REPORTING

The Company has one reportable segment as defined by U.S. GAAP, retail real estate, for the six months ended June 30, 2020 and 2019.

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Transactions with Related Parties

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Transactions With Related Parties

NOTE 13 – TRANSACTIONS WITH RELATED PARTIES

The following table summarizes the Company’s related party transactions for the six months ended June 30, 2020 and 2019. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts.

		Three Months Ended June 30,				Six Months Ended June 30,				Unpaid amounts as of
		2020		2019		2020		2019		June 30, 2020		December 31, 2019
General and administrative reimbursements	(a)	$	461	$	387	$	790	$	725	$	252	$	188
Real estate management fees		$	784	$	1,207	$	1,869	$	2,293	$	—	$	—
Property operating expenses			271		284		546		568		181		—
Construction management fees			5		25		9		74		27		23
Leasing fees			23		65		106		154		82		143
Total real estate management related costs	(b)	$	1,083	$	1,581	$	2,530	$	3,089	$	290	$	166
Business management fees	(c)	$	2,231	$	2,335	$	4,460	$	4,668	$	2,231	$	4,675

(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. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

(b) 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. As of December 31, 2019, unpaid construction management fees of $6 are included in liabilities associated with investment properties held for sale on the consolidated balance sheet. The remaining unpaid amounts are included in due to related parties on the consolidated balance sheet.

(c) 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. Unpaid amounts are included in due to related parties on the consolidated balance sheets.  

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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 14 – 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 June 30, 2020 and December 31, 2019, respectively.

	Fair Value
	Level 1		Level 2		Level 3		Total
June 30, 2020
Interest rate swap agreements - Other assets	$	—	$	—	$	—	$	—
Interest rate swap agreements - Other liabilities	$	—	$	21,417	$	—	$	21,417
December 31, 2019
Interest rate swap agreements - Other assets	$	—	$	715	$	—	$	715
Interest rate swap agreements - Other liabilities	$	—	$	7,622	$	—	$	7,622

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

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

In connection with the preparation of its financial statements, the Company has evaluated events that occurred subsequent to June 30, 2020 through the date on which these financial statements were issued to determine whether any of these events required disclosure in the financial statements.

There were no reportable subsequent events or transactions.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

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.

Significant Risks and Uncertainties related to COVID-19 Pandemic

Significant Risks and Uncertainties related to COVID-19 Pandemic

Currently, one of the most significant risks and uncertainties is the potential further adverse effect of the current pandemic of the novel coronavirus, or COVID-19. A number of our tenants had temporarily closed their stores and requested rent deferral or rent abatement during this pandemic. Many experts predict that the outbreak will trigger, or even has already triggered, a period of global economic slowdown or a global recession.

The COVID-19 pandemic has already had a material impact on the Company’s operations (See Note  5 – “Leases”) and could continue to have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to, the following:

• reduced economic activity severely impacts our tenants' businesses, financial condition and liquidity and has caused tenants to be unable to fully meet their obligations to us or to otherwise seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income;

• a prolonged economic recession in the U.S. would negatively impact the Company’s ability to lease space and negotiate and maintain favorable rents causing reductions in occupancy and rental income;

• the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and

• weaker economic conditions and defaults or failures by tenants to pay rent when due could cause us to recognize impairment in value of our tangible or intangible assets.

The extent to which the COVID-19 pandemic impacts the Company’s operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

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 its consolidated statements 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.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of the effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A grants relief to entities, allowing them an election to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. An entity that makes this election can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company has elected to apply such relief and will avail itself of the election to avoid performing a lease by lease analysis.

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:

	June 30,
	2020		2019
Cash and cash equivalents	$	31,624	$	13,897
Restricted cash		1,073		1,002
Total cash, cash equivalents, and restricted cash	$	32,697	$	14,899

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”). The Company’s investment in Mainstreet JV was held through a taxable REIT subsidiary. The TRS is expected to report both capital and net operating losses relating to its joint venture in its 2019 tax return. 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 this investment 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)

6 Months Ended

Jun. 30, 2020

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:

	June 30,
	2020		2019
Cash and cash equivalents	$	31,624	$	13,897
Restricted cash		1,073		1,002
Total cash, cash equivalents, and restricted cash	$	32,697	$	14,899

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Dispositions (Tables)

6 Months Ended

Jun. 30, 2020

Assets Of Disposal Group Including Discontinued Operation [Abstract]

Summary of Major Components of Assets and Liabilities Associated With Investment Properties Held for Sale

The following table reflects the major components of the assets and liabilities associated with investment properties held for sale as of December 31, 2019:

	December 31, 2019
Investment properties and related assets held for sale:
Land	$	6,275
Building and other improvements		27,758
Accounts and rent receivable		1,167
Acquired lease intangible assets, net		3,337
Deferred costs, net		186
Other assets		29
Investment properties and related assets held for sale	$	38,752
Liabilities associated with investment properties held for sale:
Accounts payable and accrued expenses	$	691
Due to related parties		6
Acquired intangible liabilities, net		743
Other liabilities		276
Liabilities associated with investment properties held for sale	$	1,716

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Leases (Tables)

6 Months Ended

Jun. 30, 2020

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 June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Rental income - fixed payments	$	20,938	$	25,309	$	44,968	$	50,804
Rental income - variable payments (a)		5,005		5,811		11,080		12,530
Amortization of acquired market leases, net		233		392		828		600
Rental income	$	26,176	$	31,512	$	56,876	$	63,934

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

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Acquired Intangible Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

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 June 30, 2020 and December 31, 2019: 

	June 30, 2020			December 31, 2019
Intangible assets:
Acquired in-place lease value	$	156,918		$	160,214
Acquired above market lease value		45,742			45,783
Accumulated amortization		(121,870	)		(113,308	)
Less: Assets related to investment properties held for sale		—			(3,337	)
Acquired lease intangibles, net	$	80,790		$	89,352
Intangible liabilities:
Acquired below market lease value	$	70,260		$	71,153
Accumulated amortization		(25,797	)		(23,590	)
Less: Liabilities related to investment properties held for sale		—			(743	)
Acquired below market lease intangibles, net	$	44,463		$	46,820

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Amortization recorded as amortization expense:
Acquired in-place lease value	$	3,305		$	4,188		$	7,033		$	9,029
Amortization recorded as a (reduction) increase to rental income:
Acquired above market leases	$	(746	)	$	(846	)	$	(1,529	)	$	(1,750	)
Acquired below market leases		979			1,238			2,357			2,350
Net rental income increase	$	233		$	392		$	828		$	600

Schedule of Estimated Amortization of Intangible Lease Assets and Liabilities

Estimated amortization of the respective intangible lease assets and liabilities as of June 30, 2020 for each of the five succeeding years and thereafter is as follows:  

	Acquired In-Place Leases		Above Market Leases		Below Market Leases
2020 (remainder of year)	$	5,941	$	1,491	$	1,891
2021		10,537		2,953		3,689
2022		7,898		2,664		3,456
2023		6,671		2,477		3,198
2024		5,664		2,308		3,021
Thereafter		18,691		13,495		29,208
Total	$	55,402	$	25,388	$	44,463

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Debt and Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of Mortgages and Credit Facilities Payable

As of June 30, 2020 and December 31, 2019, the Company had the following mortgages and credit facility payable:

	June 30, 2020						December 31, 2019
Type of Debt	Principal Amount			Weighted Average Interest Rate			Principal Amount			Weighted Average Interest Rate
Fixed rate mortgages payable	$	163,876			4.25	%	$	163,986			4.25	%
Variable rate mortgages payable with swap agreements		252,087			3.33	%		252,244			3.33	%
Variable rate mortgages payable without swap agreements		684			1.77	%		684			3.29	%
Mortgages payable	$	416,647			3.69	%	$	416,914			3.69	%
Credit facility payable		255,000			3.27	%		267,022			3.92	%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	$	671,647			3.53	%	$	683,936			3.78	%
Add: Unamortized mortgage premiums		735						1,051
Less: Unamortized debt issuance costs		(3,054	)					(3,660	)
Total debt	$	669,328					$	681,327

Schedule of Principal Payments and Maturities of Company's Debt

As of June 30, 2020, scheduled principal payments and maturities on the Company’s debt were as follows:

	June 30, 2020
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgage Loans		Maturity of Credit Facility		Total
2020 (remainder of the year)	$	648	$	—	$	—	$	648
2021		1,532		82,740		—		84,272
2022		615		101,537		105,000		207,152
2023		326		91,230		150,000		241,556
2024		341		—		—		341
Thereafter		295		137,383		—		137,678
Total	$	3,757	$	412,890	$	255,000	$	671,647

Summary of Interest Rate Swap Contracts Outstanding

The following table summarizes the Company’s interest rate swap contracts outstanding as of June 30, 2020.

Date Entered	Effective Date	Maturity Date	Pay Fixed Rate (a)			Notional Amount		Fair Value at June 30, 2020
Liabilities
February 11, 2015	March 2, 2015	March 1, 2022		2.02	%		6,114		(192	)
April 7, 2015	April 7, 2015	April 7, 2022		1.74	%		49,244		(1,373	)
September 17, 2015	September 17, 2015	September 17, 2022		1.90	%		13,700		(534	)
October 2, 2015	November 1, 2015	November 1, 2022		1.79	%		13,100		(506	)
December 23, 2015	December 23, 2015	January 2, 2026		2.30	%		26,000		(2,811	)
January 25, 2016	February 1, 2016	February 1, 2021		1.40	%		38,000		(279	)
June 7, 2016	July 1, 2016	July 1, 2023		1.42	%		43,680		(1,677	)
July 21, 2016	August 1, 2016	August 1, 2023		1.30	%		47,550		(1,689	)
June 5, 2017	May 31, 2017	May 15, 2022		1.90	%		14,700		(485	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		60,000		(4,747	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(1,978	)
August 23, 2018	September 4, 2018	August 1, 2023		2.74	%		25,000		(1,981	)
August 23, 2018	September 4, 2018	August 1, 2023		2.73	%		40,000		(3,165	)
						$	402,088	$	(21,417	)

(a)   Receive floating rate index based upon one-month LIBOR. At June 30, 2020, the one-month LIBOR was 0.16%.

Schedule of Effect of Derivatives on Consolidated Statements of Operations and Other Comprehensive Loss

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2020 and 2019.

	Three Months Ended June 30,						Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2020			2019			2020			2019
Effective portion of derivatives	$	(1,930	)	$	(7,206	)	$	(16,482	)	$	(11,406	)
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$	1,570		$	(443	)	$	1,973		$	(897	)

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Distributions (Tables)

6 Months Ended

Jun. 30, 2020

Distributions [Abstract]

Schedule of Distributions Paid, Declared and Rescinded

The table below presents the distributions paid, declared and rescinded during the three and six months ended June 30, 2020 and 2019.

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Distributions paid	$	—		$	10,742	$	10,841		$	22,666
Distributions declared	$	—		$	10,772	$	8,173		$	21,513
Distributions rescinded	$	(8,173	)	$	—	$	(8,173	)	$	—

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Equity-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

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
Outstanding at December 31, 2019		3,906			1,480
Granted (at grant date fair value of $18.15 per share)		4,408			—
Vested		(1,747	)		(760	)
Outstanding at June 30, 2020		6,567			720

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Transactions with Related Parties (Tables)

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following table summarizes the Company’s related party transactions for the six months ended June 30, 2020 and 2019. Certain compensation and fees payable to the Business Manager for services provided to the Company are limited to maximum amounts.

		Three Months Ended June 30,				Six Months Ended June 30,				Unpaid amounts as of
		2020		2019		2020		2019		June 30, 2020		December 31, 2019
General and administrative reimbursements	(a)	$	461	$	387	$	790	$	725	$	252	$	188
Real estate management fees		$	784	$	1,207	$	1,869	$	2,293	$	—	$	—
Property operating expenses			271		284		546		568		181		—
Construction management fees			5		25		9		74		27		23
Leasing fees			23		65		106		154		82		143
Total real estate management related costs	(b)	$	1,083	$	1,581	$	2,530	$	3,089	$	290	$	166
Business management fees	(c)	$	2,231	$	2,335	$	4,460	$	4,668	$	2,231	$	4,675

(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. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

(b) 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. As of December 31, 2019, unpaid construction management fees of $6 are included in liabilities associated with investment properties held for sale on the consolidated balance sheet. The remaining unpaid amounts are included in due to related parties on the consolidated balance sheet.

(c) 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. Unpaid amounts are included in due to related parties on the consolidated balance sheets.  

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis

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 June 30, 2020 and December 31, 2019, respectively.

	Fair Value
	Level 1		Level 2		Level 3		Total
June 30, 2020
Interest rate swap agreements - Other assets	$	—	$	—	$	—	$	—
Interest rate swap agreements - Other liabilities	$	—	$	21,417	$	—	$	21,417
December 31, 2019
Interest rate swap agreements - Other assets	$	—	$	715	$	—	$	715
Interest rate swap agreements - Other liabilities	$	—	$	7,622	$	—	$	7,622

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Organization (Narrative) (Details)	1 Months Ended	6 Months Ended
	Jan. 31, 2020 Property	Jun. 30, 2020 ft² Property State
Organization [Line Items]
Target percentage of grocery-anchored property		100.00%
Number of properties sold	3	15
Number of retail properties owned		44
Square footage of real estate properties owned | ft²		6,470,347
Number of states in which company owns real estate properties | State		21
Weighted average physical occupancy rate of property portfolio		93.40%
Weighted average economic occupancy rate of property portfolio		94.00%
DRP [Member]
Organization [Line Items]
Suspension effective date		Jun. 06, 2020
Share Repurchase Program [Member]
Organization [Line Items]
Percentage of share price on repurchase of shares		80.00%
Suspension effective date		Jun. 26, 2020

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Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands		12 Months Ended
	Jan. 01, 2019	Dec. 31, 2018	Jun. 30, 2020	Dec. 31, 2019
Acquired Finite Lived Intangible Assets [Line Items]
Operating lease liability			$ 23,863	$ 23,696
Operating lease right-of-use asset			$ 15,243	$ 15,478
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 investment		$ 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%
State rate net of federal tax benefit		7.51%
ASU 2017-12 [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Cumulative reversal of recognized hedge ineffectiveness	$ (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	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Cash and cash equivalents	$ 31,624	$ 4,516	$ 13,897
Restricted cash	1,073	1,017	1,002
Total cash, cash equivalents, and restricted cash	$ 32,697	$ 5,533	$ 14,899	$ 16,240

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Equity (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended		36 Months Ended	92 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Oct. 16, 2015	Jun. 30, 2020	Mar. 03, 2020	Dec. 31, 2019	Mar. 21, 2019	Mar. 20, 2019
Equity [Line Items]
Common stock, shares sold	36,020,345		36,020,345		33,534,022	36,020,345		35,799,388
Proceeds from offering					$ 834,399,000
Common stock, shares outstanding	36,020,345		36,020,345			36,020,345		35,799,388
Distribution reinvestment plan, shares						5,574,215
Shares repurchased through the share repurchase program						3,092,634
Distribution reinvested		$ 4,835,000	$ 4,547,000	$ 10,298,000
Stock repurchase program, amount	$ 25,000	2,363,000	127,000	4,765,000
Other liabilities	26,499,000		26,499,000			$ 26,499,000		$ 16,666,000
Liabilities	776,372,000		$ 776,372,000			776,372,000		794,040,000
Third Amended and Restated Share Repurchase Program [Member]
Equity [Line Items]
Limit on share repurchases as a percentage of proceeds of the distribution reinvestment program			50.00%
Description of share repurchase program			Under the Third A&R SRP, the Company is authorized to make ordinary repurchases and Exceptional Repurchases at a price equal to 80.0% of the “share price,” which is defined in the Third A&R SRP the same way as described above for the second amended and restated SRP. Prior to the amendment, the Company was authorized to make Exceptional Repurchases at a price equal to 100% of the “share price.”The Third A&R SRP provides the Company’s board of directors with the discretion to reduce the funding limit for share repurchases. The Third 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. As the Company’s board of directors has suspended the SRP, there is no current effective funding limit based on % of the net proceeds from the DRP. See Note 1 – “Organization” for further discussion on the suspension of the SRP. 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 Exceptional Repurchases and (b) second, all ordinary repurchases.
Third Amended and Restated Share Repurchase Program [Member] | Exceptional Repurchases [Member]
Equity [Line Items]
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%
Prior Share Repurchase Agreement [Member] | Exceptional Repurchases [Member]
Equity [Line Items]
Percentage of share price on repurchase of shares							100.00%
Stock Repurchase Program [Member]
Equity [Line Items]
Other liabilities								$ 2,278,000
Liabilities	0		$ 0			$ 0
Minimum [Member]
Equity [Line Items]
Stock repurchase program, to be held			1 year
Maximum [Member] | Second Amended and Restated Share Repurchase Program [Member]
Equity [Line Items]
Stock repurchase program per share amount									$ 25
Percentage of share price on repurchase of shares									80.00%
Maximum [Member] | Third Amended and Restated Share Repurchase Program [Member]
Equity [Line Items]
Percentage of prior fiscal year end outstanding shares that may be repurchased			5.00%
DRP [Member]
Equity [Line Items]
Distribution reinvested	$ 0	$ 4,835,000	$ 4,547,000	$ 10,298,000

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Dispositions - Additional Information (Details) $ in Thousands	1 Months Ended	6 Months Ended	12 Months Ended
	Jan. 31, 2020 USD ($) Property	Jun. 30, 2020 USD ($) Property	Dec. 31, 2019 Property
Assets Of Disposal Group Including Discontinued Operation [Abstract]
Number of properties sold classified as held for sale			3
Number of properties sold	3	15
Cash proceeds from sale of property | $	$ 37,255	$ 37,255

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Dispositions - Summary of Major Components of Assets and Liabilities Associated With Investment Properties Held for Sale (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Investment properties and related assets held for sale:
Land	$ 6,275
Building and other improvements	27,758
Accounts and rent receivable	1,167
Acquired lease intangible assets, net	3,337
Deferred costs, net	186
Other assets	29
Investment properties and related assets held for sale	38,752
Liabilities associated with investment properties held for sale:
Accounts payable and accrued expenses	691
Due to related parties	6
Acquired intangible liabilities, net	743
Other liabilities	276
Liabilities associated with investment properties held for sale	$ 1,716

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Leases - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) OperatingLease	Dec. 31, 2019 USD ($)
Operating Leased Assets [Line Items]
Number of retail operating leases | OperatingLease	700
Accounts and rent receivable, net	$ 22,974	$ 17,231
COVID-19 [Member]
Operating Leased Assets [Line Items]
Accounts and rent receivable, net	22,974
Allowance for bad debts	3,627
Deferred rent receivable	$ 4,477
Minimum [Member]
Operating Leased Assets [Line Items]
Lessor, operating leases, remaining lease term	1 year
Maximum [Member]
Operating Leased Assets [Line Items]
Lessor, operating leases, remaining lease term	17 years

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Leases - Summary of Rental Income Related to Operating Leases (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Operating Leases Lease Income [Abstract]
Rental income - fixed payments		$ 20,938	$ 25,309	$ 44,968	$ 50,804
Rental income - variable payments	[1]	5,005	5,811	11,080	12,530
Amortization of acquired market leases, net		233	392	828	600
Rental income		$ 26,176	$ 31,512	$ 56,876	$ 63,934

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

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Acquired Intangible Assets and Liabilities (Schedule of Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Intangible assets:
Accumulated amortization	$ (121,870)	$ (113,308)
Less: Assets related to investment properties held for sale		(3,337)
Acquired lease intangibles, net	80,790	89,352
Intangible liabilities:
Acquired below market lease value	70,260	71,153
Accumulated amortization	(25,797)	(23,590)
Less: Liabilities related to investment properties held for sale		(743)
Acquired below market lease intangibles, net	44,463	46,820
Acquired in-place lease value [Member]
Intangible assets:
Acquired intangible assets	156,918	160,214
Acquired lease intangibles, net	55,402
Acquired above market lease value [Member]
Intangible assets:
Acquired intangible assets	45,742	$ 45,783
Acquired lease intangibles, net	$ 25,388

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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		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a (reduction) increase to rental income	$ 233	$ 392	$ 828	$ 600
Acquired in-place lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as amortization expense	3,305	4,188	7,033	9,029
Acquired above market lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a (reduction) increase to rental income	(746)	(846)	(1,529)	(1,750)
Acquired below market lease value [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Amortization recorded as a (reduction) increase to rental income	$ 979	$ 1,238	$ 2,357	$ 2,350

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Acquired Intangible Assets and Liabilities (Schedule of Estimated Amortization of Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Future amortization for acquired in-place and above market lease assets:
Acquired lease intangibles, net	$ 80,790	$ 89,352
Future amortization for below market lease liabilities:
2020 (remainder of year)	1,891
2021	3,689
2022	3,456
2023	3,198
2024	3,021
Thereafter	29,208
Total	44,463
Acquired in-place lease value [Member]
Future amortization for acquired in-place and above market lease assets:
2020 (remainder of year)	5,941
2021	10,537
2022	7,898
2023	6,671
2024	5,664
Thereafter	18,691
Acquired lease intangibles, net	55,402
Above Market Leases [Member]
Future amortization for acquired in-place and above market lease assets:
2020 (remainder of year)	1,491
2021	2,953
2022	2,664
2023	2,477
2024	2,308
Thereafter	13,495
Acquired lease intangibles, net	$ 25,388

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Debt and Derivative Instruments (Schedule of Mortgages and Credit Facility Payable) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 416,647	$ 416,914
Credit facility payable	255,000	267,022
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	671,647	683,936
Add: Unamortized mortgage premiums	735	1,051
Less: Unamortized debt issuance costs	(3,054)	(3,660)
Total debt	$ 669,328	$ 681,327
Mortgages Payable, Weighted Average Interest Rate	3.69%	3.69%
Credit Facilities Payable, Weighted Average Interest Rate	3.27%	3.92%
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps, Weighted Average Interest Rate	3.53%	3.78%
Fixed rate mortgages payable [Member]
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 163,876	$ 163,986
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	$ 252,087	$ 252,244
Mortgages Payable, Weighted Average Interest Rate	3.33%	3.33%
Variable rate mortgages payable without swap agreements [Member]
Mortgage Loans On Real Estate [Line Items]
Mortgages payable	$ 684	$ 684
Mortgages Payable, Weighted Average Interest Rate	1.77%	3.29%

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Debt and Derivative Instruments (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) Property	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Debt principal balance	$ 671,647,000		$ 671,647,000		$ 683,936,000
Estimated fair value of debt	686,352,000		686,352,000		689,790,000
Outstanding line of credit	255,000,000		255,000,000		$ 267,022,000
Interest expense	6,279,000	$ 7,170,000	12,777,000	$ 14,323,000
Amount expected to be reclassified from accumulated other comprehensive loss into income in the next twelve months			$ 7,451,000
Mortgages Payable [Member]
Debt Instrument [Line Items]
Weighted Average Years to Maturity			3 years 2 months 12 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]
Credit facility, maximum borrowing capacity	200,000,000		$ 200,000,000
Line of credit accordion feature to increase available borrowings	700,000,000		700,000,000
Outstanding line of credit	105,000,000		$ 105,000,000
Credit facility, interest rate			1.83%
Credit facility, maturity date			Aug. 01, 2022
Line of credit facility, expiration date, extension period			1 year
Credit facility available for borrowing	95,000,000		$ 95,000,000
Term Loan [Member]
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	150,000,000		150,000,000
Outstanding line of credit	$ 150,000,000		$ 150,000,000
Credit facility, interest rate			4.29%
Credit facility, maturity date			Aug. 01, 2023
Credit Facility [Member]
Debt Instrument [Line Items]
Number of properties pledged as collateral | Property			25

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Debt and Derivative Instruments (Schedule of Principal Payments and Maturities of Company's Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
2020 (remainder of the year)	$ 648
2021	84,272
2022	207,152
2023	241,556
2024	341
Thereafter	137,678
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	671,647	$ 683,936
Maturity of Credit Facility [Member]
Debt Instrument [Line Items]
2022	105,000
2023	150,000
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	255,000
Scheduled Principal Payments [Member]
Debt Instrument [Line Items]
2020 (remainder of the year)	648
2021	1,532
2022	615
2023	326
2024	341
Thereafter	295
Total debt before unamortized mortgage premiums and debt issuance costs including impact of interest rate swaps	3,757
Maturities of Mortgage Loans [Member]
Debt Instrument [Line Items]
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	$ 412,890

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Debt and Derivative Instruments (Summary of Interest Rate Swap Contracts Outstanding) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Derivative [Line Items]
Derivative liability, notional amount	$ 402,088
Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (21,417)
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 liability, notional amount	$ 6,114
Interest Rate Swap One [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (192)
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 liability, notional amount	$ 49,244
Interest Rate Swap Two [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (1,373)
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 liability, notional amount	$ 13,700
Interest Rate Swap Three [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (534)
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 liability, notional amount	$ 13,100
Interest Rate Swap Four [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (506)
Interest Rate Swap Five [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 liability, notional amount	$ 26,000
Interest Rate Swap Five [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (2,811)
Interest Rate Swap Six [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 liability, notional amount	$ 38,000
Interest Rate Swap Six [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (279)
Interest Rate Swap Seven [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 liability, notional amount	$ 43,680
Interest Rate Swap Seven [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (1,677)
Interest Rate Swap Eight [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 liability, notional amount	$ 47,550
Interest Rate Swap Eight [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (1,689)
Interest Rate Swap Nine [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 liability, notional amount	$ 14,700
Interest Rate Swap Nine [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (485)
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 liability, notional amount	$ 60,000
Interest Rate Swap Ten [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (4,747)
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 liability, notional amount	$ 25,000
Interest Rate Swap Eleven [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (1,978)
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 liability, notional amount	$ 25,000
Interest Rate Swap Twelve [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (1,981)
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 liability, notional amount	$ 40,000
Interest Rate Swap Thirteen [Member] | Recurring [Member]
Derivative [Line Items]
Fair value of derivative liabilities measured on recurring basis	$ (3,165)

[1] Receive floating rate index based upon one-month LIBOR. At June 30, 2020, the one-month LIBOR was 0.16%.

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Debt and Derivative Instruments (Summary of Interest Rate Swap Contracts Outstanding) (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2020
Derivative [Line Items]
Derivative instrument, receive floating rate index	one-month LIBOR
LIBOR [Member]
Derivative [Line Items]
One month floating rate	0.16%

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Debt and Derivative Instruments (Schedule of Effect of Derivatives on Consolidated Statements of Operations and Other Comprehensive Loss) (Details) - Designated as Hedging Instrument [Member] - Cash Flow Hedging [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Effective portion of derivatives	$ (1,930)	$ (7,206)	$ (16,482)	$ (11,406)
Reclassification adjustment for amounts included in net gain or loss (effective portion)	$ 1,570	$ (443)	$ 1,973	$ (897)

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Distributions (Narrative) (Details)	Dec. 31, 2019 $ / shares
Distributions [Abstract]
Quarterly amount per share of distributions	$ 0.3018

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Distributions (Schedule of Distributions Paid, Declared and Rescinded) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Distributions [Abstract]
Distributions paid		$ 10,742	$ 10,841	$ 22,666
Distributions declared		$ 10,772	8,173	$ 21,513
Distributions rescinded	$ (8,173)		$ (8,173)

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Earnings (Loss) per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Antidilutive shares excluded from the computation of diluted earnings per share	6,892	4,648	6,667	4,381

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Equity-Based Compensation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average remaining period unrecognized compensation expense related to non-vested			1 year 9 months 18 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]
Weighted average remaining period unrecognized compensation expense related to non-vested			1 year 9 months 18 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
Restricted Shares and Restricted Share Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation expense of unvested share-based awards	$ 105		$ 105
Total fair value at vesting date	46	$ 39	46	$ 39
Non-Employee Directors [Member] | Restricted Shares and Restricted Share Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 16		$ 31

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Equity-Based Compensation (Summary of the Restricted Shares and Restricted Share Units) (Details)	6 Months Ended
	Jun. 30, 2020 shares
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, Shares	3,906
Granted, Shares	4,408
Vested, Shares	(1,747)
Outstanding, Shares	6,567
Restricted Stock Units (RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, Shares	1,480
Vested, Shares	(760)
Outstanding, Shares	720

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Equity-Based Compensation (Summary of the Restricted Shares and Restricted Share Units) (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2020 $ / shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Granted, Grant Date Fair Value	$ 18.15

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Segment Reporting (Details) - Segment	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
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		6 Months Ended
		Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Related Party Transaction [Line Items]
Due to related parties		$ 2,773		$ 2,773		$ 5,023
General and Administrative Reimbursements [Member]
Related Party Transaction [Line Items]
General and administrative expenses incurred with related party	[1]	461	$ 387	790	$ 725
Due to related parties	[1]	252		252		188
Real Estate Management Fees [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		784	1,207	1,869	2,293
Property Operating Expenses [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		271	284	546	568
Due to related parties		181		181
Construction Management Fees [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		5	25	9	74
Due to related parties		27		27		23
Leasing fees [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party		23	65	106	154
Due to related parties		82		82		143
Real Estate Management Costs [Member]
Related Party Transaction [Line Items]
Real estate management related costs with related party	[2]	1,083	1,581	2,530	3,089
Due to related parties	[2]	290		290		166
Business Management Fee [Member]
Related Party Transaction [Line Items]
Expenses incurred with related party	[3]	2,231	$ 2,335	4,460	$ 4,668
Due to related parties	[3]	$ 2,231		$ 2,231		$ 4,675

[1] 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. Unpaid amounts are included in due to related parties in the consolidated balance sheets.

[2] 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. As of December 31, 2019, unpaid construction management fees of $6 are included in liabilities associated with investment properties held for sale on the consolidated balance sheet. The remaining unpaid amounts are included in due to related parties on the consolidated balance sheet.

[3] 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. Unpaid amounts are included in due to related parties on the consolidated balance sheets.

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Transactions with Related Parties (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
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%
Monthly Real Estate Management Fee Of Single Tenant Property [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Property management fee, percentage of gross income	1.90%
Monthly Real Estate Management Fee Of Any Other Property [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Property management fee, percentage of gross income	3.90%
Construction Management Fees [Member]
Related Party Transaction [Line Items]
Liabilities associated with investment properties held for sale		$ 6

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Fair Value Measurements (Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis) (Details) - Recurring [Member] - Interest Rate Swap Agreements [Member] - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Other Assets [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other assets		$ 715
Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other liabilities	$ 21,417	7,622
Level 2 [Member] | Other Assets [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other assets		715
Level 2 [Member] | Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Interest rate swap agreements - Other liabilities	$ 21,417	$ 7,622