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Monday, 25 March 2019

InPoint Commercial Launches Effort to Raise $2.35Bln of Equity

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Commercial Real Estate Direct Staff Report

InPoint Commercial Real Estate Income Inc., a REIT that was launched just more than two years ago by Inland Real Estate Investment Corp. and Sound Point Capital, is aiming to raise up to $2.4 billion through the sale of its common shares.

The non-traded REIT, which owns 18 commercial real estate loans totaling nearly $250 million and 10 CMBS investments valued at $91.2 million, had been capitalizing its investments with equity that it had raised privately. As of March 15, it had raised $196.5 million through the sale of a specific class of shares for $25 each, plus fees totaling up to 9.5 percent of the share price.

It's latest offering, nonetheless, is classified as a blind pool in that the company hasn't identified assets that would be capitalized with the capital it aims to raise.

It's now offering $2 billion of shares and could raise up to another $350 million through a dividend-reinvestment program. It's raising capital by offering five classes of shares in the company that have varying or no upfront selling commissions or dealer-manager fees, depending on the sales channel used.

Shares sold through fee-based programs, or wrap accounts, for instance, aren't assessed upfront selling commissions or dealer-manager fees. But they're assessed an annual stockholder servicing fee. Shares sold through traditional brokerage, or transaction-based accounts, pay up-front fees, but are excused from paying the annual servicing fee.

The company is structured to have a perpetual life, so even though it has registered to raise $2.35 billion, it technically could raise substantially more with subsequent registrations.

Shares will be sold at their net asset value, which will be calculated monthly. And investors will have a certain amount of liquidity, in that they can ask InPoint to buy back shares every month, after they've held them for at least a year. But the company isn't obligated to buy them back.

InPoint originates floating-rate senior, subordinate and mezzanine loans, as well as participations in the same and it invests in floating-rate CMBS and REIT unsecured notes. It also could invest in properties that are net leased to their single tenants.

Sound Point is the company's subadvisor and will be responsible for identifying suitable investment opportunities and executing on them. The 11-year-old company has $19.4 billion of assets under management.

Overseeing its investments on behalf of InPoint is Donald MacKinnon, a long-time commercial real estate financing executive who until 2015 was president and chief operating officer of what then was known as Realty Finance Trust Inc., a specialty finance company that was sponsored by AR Capital. That company since has been renamed Benefit Street Partners Realty Trust Inc. after its management was transferred to Benefit Street Partners. MacKinnon previously was with Cole Real Estate Investments and during the 1990s was head of the real estate finance group at Donaldson, Lufkin & Jenrette, and later was head of structured credit trading and asset finance at Nomura Securities.

Mitchell A. Sabshon, chief executive of Inland Real Estate, serves in a similar capacity at InPoint.

Andrew Winer, who had been chief investment officer of Realty Income, is InPoint's chief investment officer, while Catherine Lynch, a 28-year Inland veteran, is chief financial officer.

InPoint's existing portfolio has a 38 percent concentration of loans against hotel properties, 30 percent against apartment properties, 17 percent against offices and 9 percent against industrial. The remaining 6 percent are against retail properties.

Its senior loan portfolio is comprised of middle-market loans in that they range from a $5.2 million loan against a California apartment property, to a $31 million loan against a portfolio of Pennsylvania industrial properties. Coupons range from Libor plus 350 basis points to Libor plus 505 bps.

Its securities portfolio, which is comprised of 10 positions valued at $91.2 million, is dominated by unrated bonds and those rated BB-. Only 24 percent carry ratings of AA- or better. It's generating a weighted average yield of 5.6 percent from its investments, which have an average 1.3 years until their maturity.

The company has a repurchase agreement with Credit Suisse's Column Financial unit through which it can borrow up to $250 million at a cost pegged to Libor plus 225 basis points in order to leverage its investments. But it said, in a regulatory filing, that it could tap the collateralized loan obligation market for match-term financing for its loan originations.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.



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Additional Info

  • Syndicate to Realpoint: No
  • Subject: Commercial MBS (CMBS), Mortgages/Financing (MOR), Stock/Equity Offerings (IPO)
  • Company: Inland Real Estate Corp.
  • Private: No
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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