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Inland Real Estate Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 9, 2012 09:21AM

Inland Real Estate Corp. (IRC) filed Quarterly Report for the period ended 2012-03-31. Inland Re Corp has a market cap of $762.2 million; its shares were traded at around $8.31 with a P/E ratio of 10.4 and P/S ratio of 4.6. The dividend yield of Inland Re Corp stocks is 6.7%.



Highlight of Business Operations:

Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of comprehensive income until realized. The Company has recorded a net unrealized gain of $1,255 and $996 on the accompanying consolidated balances sheets as of March 31, 2012 and December 31, 2011, respectively. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. Sales of investment securities available-for-sale during the three months ended March 31, 2012 and 2011 resulted in gains on sale of $652 and $455, respectively, which are included in other income in the accompanying consolidated statements of operations and comprehensive income. Dividend income is recognized when received.

The joint venture was determined to be a VIE under ASC Topic 810 and is consolidated by the Company. Prior to the sale of any ownership interests, the joint venture owns 100% of the ownership interests in the property and controls the major decisions that affect the underlying property; and therefore upon initial acquisition, the joint venture consolidates the property. At the time of first sale of an ownership interest, the joint venture no longer controls the underlying property as the activities and decisions that most significantly impact the property’s economic performance are now subject to joint control among the co-owners or lender; and therefore, at such time, the property is deconsolidated and accounted for under the equity method (unconsolidated). Once the operations are unconsolidated, the income is included in equity in earnings (loss) of unconsolidated joint ventures until all ownership interests have been sold. The table below reflects those properties that became unconsolidated during the three months ended March31, 2011, and therefore no longer represent the consolidated assets and liabilities of the VIE. There were no properties that became unconsolidated during the three months ended March 31, 2012.

During the three months ended March 31, 2012, the joint venture with IPCC acquired nine investment properties. During the three months ended March 31, 2012 and 2011, the Company earned acquisition and management fees from this venture which are included in fee income from unconsolidated joint ventures on the accompanying consolidated statements of operations and comprehensive income. Additionally, in conjunction with the sales, the Company recorded gains of approximately $52 and $313 for the three months ended March 31, 2012 and 2011, respectively, which are included in gain on sale of joint venture interests on the accompanying consolidated statements of operations and comprehensive income.

The Company’s proportionate share of the earnings or losses related to its unconsolidated joint ventures is reflected as equity in earnings (loss) of unconsolidated joint ventures on the accompanying consolidated statements of operations and comprehensive income. Additionally, the Company earns fees for providing property management, leasing and acquisition activities to these ventures. The Company recognizes fee income equal to the Company’s joint venture partner’s share of the expense or commission in the accompanying consolidated statements of operations and comprehensive income. During the three months ended March 31, 2012 and 2011, the Company earned $1,038 and $1,163, respectively, in fee income from its unconsolidated joint ventures. This fee income decreased mostly due to acquisition fees related to sales on properties sold through the Company’s joint venture with IPCC. Acquisition fees are earned on the IPCC joint venture properties as the interests are sold to the investors. Partially offsetting this decrease was an increase in management fees on an increased number of properties in unconsolidated joint ventures. These fees are reflected on the accompanying consolidated statements of operations and comprehensive income as fee income from unconsolidated joint ventures.

Fee income from unconsolidated joint ventures decreased $125 for the three months ended March 31, 2012, as compared to the three months ended March 31, 2011. The decrease is due in most part to a decrease in acquisition fees earned on sales of interests through our IPCC joint venture. This decrease was offset by increased management fees from our unconsolidated joint ventures due to an increased number of properties under management during the three months ended March 31, 2012, as compared to the three months ended March 31, 2011.

Read the The complete Report



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