In the three-plus years since its 2021 listing, InvenTrust Properties Corp. (NYSE: IVT) has doubled down on fortifying its position in its core Sun Belt markets to benefit from the positive migration and business formation patterns that continue to shape the region.
The Downers Grove, Illinois-based REIT owns a portfolio of open-air shopping centers that are primarily anchored by essential goods and services providers and are almost exclusively located in Sun Belt markets where InvenTrust sees solid growth potential. As of year-end 2024, the company’s leased occupancy rate was 97.4%.
“We’ve proven in the first three years of our business that we can grow our free cash flow, or our FFO per share growth, faster than the sector average,” says CEO Daniel ‘DJ’ Busch. “If we can build a flywheel, where we can continue to grow our dividend because our FFO per share is growing at a faster pace, then our total returns for our investors who want to be in retail should stand up quite favorably to the competition,” he adds.
Busch, who joined InvenTrust as CFO in 2019 from Green Street, says the REIT had begun its pivot to the Sun Belt prior to his arrival. He credits his predecessors with recognizing the “green shoots” of the region’s fundamentals and adds that tailwinds benefitting Sun Belt markets are unlikely to change materially going forward.
“It could probably slow, but I do think the likes of Texas and Arizona, where we have recently acquired some properties, South Carolina, North Carolina, and Florida will continue to benefit relative to what we’re seeing in other regions of the country,” Busch says.
Given the population growth in its core markets, InvenTrust has kept a close eye on new supply. However, with construction costs remaining elevated and the length of time needed to stabilize a new retail property, “there’s still quite a bit of runway for high quality retail centers with no real new supply competition, which is going to bode well for the next couple of years,” Busch says.
InvenTrust’s portfolio also benefits from having a majority of its properties located in established markets, according to Busch. Any new supply tends to enter the outer rings of those markets, which “insulates our properties to a greater extent than if you’re buying properties that are the first in a new market where there could be immediate new competition as more households are built,” he says.
Keep it Simple
For a small cap REIT like InvenTrust, a simple, focused strategy is key, Busch says, while admitting that “simple” is a term his team isn’t always keen to hear him use. “It’s not as simple as I make it sound, but I think it’s important in real estate to let the properties speak for themselves and don’t make it overly complicated.”
By making sure investors are not “burdened with complexity,” Busch says, there’s a greater chance they are more open-minded to hearing the InvenTrust story and investing in the company.
That approach seemed to bear fruit in late September 2024, when InvenTrust successfully conducted its first equity offering since becoming a traded company, raising approximately $250 million.
#InvenTrust #Build #Momentum #Core #Sun #Belt #Markets