This article was coproduced with Leo Nelissen.

Happy New Year to everyone!

What better way to kick off the first month of the year than by delving into a relatively young real estate investment trust (“REIT”) that deserves more attention?

With a market cap of $1.7 billion, InvenTrust Properties (NYSE:IVT) is one of the smaller REITs on our radar.

We generally lean towards larger “blue chip” recommendations, but these small cap gems have potential, despite greater risks.

• Limited Diversification
• Capital Access
• Market Sensitivity
• Management Expertise

Nonetheless, IVT stands out as one of the most promising small-cap REITs on the market, offering safety, income, and growth potential.

So, let’s dive into the details!

The Evolution of InvenTrust Properties

Founded in 2004 as Inland American Real Estate Trust, Inc., the company rebranded itself as InvenTrust Properties Corp. in April 2015.

From its outset, the company has operated as a REIT in the retail industry, competing with strip mall REITs like Kimco (KIM).

The company’s common stock debuted on the New York Stock Exchange on October 12, 2021.

By 2023, the company had ownership or interest in 62 retail properties, covering a gross leasable area (“GLA”) of approximately 10.3 million square feet.

This portfolio includes assets from a joint venture partnership with IAGM Retail Fund I, LLC. It acquired the remaining four retail properties from IAGM in a deal worth roughly $222 million.

The company’s focus lies in Sunbelt assets, notably in Austin, Southern California, Houston, Atlanta, and Miami – some of the fastest growing markets in the United States.

These markets are expected to have robust long-term population growth, with a big part of its portfolio projected to witness annual population growth of more than 3% through 2027.

During the third quarter, the company noted that it currently benefits from favorable supply and demand dynamics, with new retail construction remaining below historical averages.

Shopping center vacancy is at its lowest level since the global financial crisis, contributing to positive leasing results, especially in the markets where the company operates.

The company’s focus on low-risk retail assets, predominantly essential retail, sets it apart. 60% of its annual rent is generated from essential retail tenants, including grocery stores operated by Kroger (KR), Publix, Albertsons, Whole Foods, Costco (COST), and Trader Joe’s.

Its largest 15 tenants account for 27% of its total annual revenue, with almost every single one of these tenants having an investment-grade balance sheet. When investing in assets, the company looks for four key factors:

• Essential retail
• Last-mile solutions
• Strong traffic
• Consumer convenience