Analysis of Investments

Chicagoland Supermarket Portfolio

Inland

Inland's Chicagoland Supermarket Portfolio is an investment into three Jewel Osco Supermarkets in the Chicago MSA. The Sponsor intends to raise capital as an all-cash investment, then refinance the properties and return up to 70% of the original invested capital to investors tax-free.

Investment Highlights

  • Yr. 1 Cash-on-Cash 5.00%
  • Initial Occupancy 100.00%
  • Est. Time Horizon None YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 5.28%
  • Investor Purchase Price $39,769,696
  • Total Offering Size $39,769,696

Loan Information

N/A

  • Yr. 1 DSCR None
  • Loan-to-Offering 0.00%
  • Hold Period DSCR None

Tenant Information & Lease Terms

"This portfolio has three different properties that are occupied and operated by the same tenant. Jewel Osco - A non-investment grade tenant that is guaranteed by Albertsons Companies, LLC. Albertsons is also non-investment grade and has a rating of Ba2 from Moody's. The supermarket chain (Albertsons) is the third larges nationwide and has over 2,300 stores and 273,000 employees nationwide. Jewel Osco has a strong local presence in the Chicago area and has been serving the community since 1899."

Key Positives

  • Inland is underwriting this investment conservatively, with Effective Gross Revenue and Operating Expenses growing at the same rate.

  • Inland has used reasonable operating assumptions compared to the valuations completed by a Third Party Appraiser.

Key Risks to Consider

  • The CAP rate on this investment is low (5.28%).

  • The tenant, Jewel Osco, has a right of first refusal on the properties. This could hinder a potential sale and may lead to potential buyers not making an offer on the property. Additionally it may slow down the sales process during negotiations with all parties.

  • The tenant at the property is not investment grade. They have a lease guaranteed by Albertsons, who has a credit rating of Ba2 from Moody's, this is also non-investment grade.

  • There is  no Master Lease on the investment. In a DST re-leasing is not allowed, and therefore a Master Tenant is necessary should one of the tenants choose to vacate the property.

  • Inland has proposed a Cash Out Refinance structure for this investment. Although not guaranteed, should Inland refinance and return capital to investors the IRS could disallow an investors exchange. The investors are opening themselves to significant risk of audit and IRS intervention in this investment.

Investment Sponsor Information

Inland

The Inland Real Estate Group of Companies, Inc. ("Inland"), is an industry leader and one of the nation's largest commercial real estate and finance organizations. As a business incubator, we specialize in creating, developing and supporting Inland member companies that provide commercial real estate-related services and alternative investment funds, including limited partnerships, institutional funds and non-listed and listed REITs.

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