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InPoint Commercial Real Estate Income, Inc. (ICR-PA)·Q4 2021 Earnings Summary

Executive Summary

  • Q4 2021 delivered higher “Total income” ($8.50M) and stable profitability ($2.75M net income) versus Q3, driven by a larger interest-earning loan book and stronger hotel revenue; net income margin was 32.3% (vs. 32.2% in Q3) .
  • Year over year, Q4 “Total income” grew 51% (to $8.50M) while net income rose 37% (to $2.75M), reflecting portfolio expansion and a modestly profitable Q4 2020 comp after significant 2020 securities losses earlier in that year .
  • Loan portfolio expanded 51% in 2021 to $664.2M across 38 loans; 17 floating-rate loans were originated in 2021 ($364.9M), funded by preferred proceeds and participations; 98% of the loan book is variable-rate going into a rising-rate cycle .
  • Distributions maintained at a $1.25 annualized run-rate through Q4 2021; SRP reinstated (with limits) and preferred dividend declared and paid for the period Sept 22–Dec 30, 2021 ($0.459375 per share) .
  • No formal revenue/EPS guidance or street consensus available; catalysts skew to sustained origination pace, hotel recovery and SOFR transition (new loans SOFR-based starting Jan 1, 2022) .

What Went Well and What Went Wrong

  • What Went Well
    • Loan growth and deployment: “We originated 17 floating rate loans totaling $364.9 million… and increased our loan portfolio… to $665.5 million” in 2021; all 38 loans current on interest payments .
    • Higher income and stable margins: Q4 Total income rose to $8.50M with net income margin ~32% (vs. ~32% Q3), supported by higher REO revenue and net interest income .
    • Liquidity and distribution stability: Gross distributions held at $1.25 annualized per share through Q4; SRP reinstated; cash balance $57.3M at year-end and expanded repo capacity (CF limit to $350M) .
  • What Went Wrong
    • Hotel headwinds resurfaced in Q4: Management noted “the fourth quarter of 2021 results saw a decline in occupancy as COVID-19 rates increased and travel was restricted,” with a 2021 net operating loss before D&A of ~$2.2M at the Renaissance O’Hare .
    • Lower all-in portfolio yield: All-in loan yield declined to 4.6% at YE21 from 5.5% at YE20 due to tighter spreads on new originations, pressuring run-rate NII absent continued growth .
    • Ongoing exposure to macro/credit risks: Management highlights credit, financing, and LIBOR transition risks, including potential spread volatility and borrower stress in hospitality/retail, though they exited CMBS in 2020 and will originate SOFR loans in 2022 .

Financial Results

MetricQ2 2021Q3 2021Q4 2021Q4 2020
Interest Income ($M)7.22 7.32 7.99 (derived from FY2021 minus 9M) 6.71 (derived from FY2020 minus 9M)
Interest Expense ($M)(2.23) (2.40) (2.28) (derived) (1.69) (derived)
Net Interest Income ($M)4.99 4.92 5.72 (derived) 5.02 (derived)
REO Revenue ($M)1.74 2.72 2.78 (derived) 0.61 (derived)
Total Income ($M)6.74 7.64 8.50 (derived) 5.63 (derived)
Operating Expenses ($M)3.44 5.17 5.75 (derived) 4.51 (derived)
Other (Loss)/Income ($M)0.00 0.00 0.00 0.89 (derived)
Net Income ($M)3.30 2.46 2.75 (derived) 2.01 (derived)
Net Income Margin (%)48.9% (3.30/6.74) 32.2% (2.46/7.64) 32.3% (2.75/8.50) (derived) 35.8% (2.01/5.63) (derived)
Net Income to Common ($M)3.30 2.46 1.09 (NI – preferred dividends) 2.01 (no preferred dividends in 2020 Q4 comp)
EPS (Basic/Diluted) ($)0.28 0.22 N/A (not separately disclosed)N/A

Notes: Q4 2021 figures derived as FY2021 less 9M2021; Q4 2020 figures derived as FY2020 less 9M2020. Preferred dividends in Q4 2021 were $1.654M for the Sept 22–Dec 30 period .

KPIs and Portfolio

  • Loan portfolio and credit KPIs
KPIQ2 2021Q3 2021Q4 2021
Loans Outstanding – Principal ($M)554.80 521.26 664.17
Number of Loans36 34 38
All-in Yield (%)5.2% 5.2% 4.6%
Weighted Avg LTV (%)69% 70% 70%
Variable-rate Loans (%)97% 97% 98%
  • Hotel (Renaissance Chicago O’Hare) operating metrics
PeriodAverage OccupancyRevPARADR
Q2 202148% $43 $89
Q3 202157% $65 $114
Q4 202147% $54 $113

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Distributions (common)Monthly (Q4 2021)$1.25 annualized ($0.1042/month) as of Jun 30, 2021 $1.25 annualized ($0.1042/month) maintained through Dec 31, 2021 Maintained
Funding Index on New LoansBeginning Jan 1, 2022LIBOR on legacy loans; fallback language in place New originations to SOFR starting 1/1/2022 Policy update

Note: No formal revenue/EPS guidance was issued.

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2–Q3 2021)Current Period (Q4 2021)Trend
Loan originations & portfolio growthOriginated 9 loans in 1H; +$80M Q3 loan book growth pending ~$136.4M term sheets targeted for Q4 17 loans originated in 2021; loan book +51% to $665.5M Accelerating deployment achieved
Hotel recovery (Renaissance O’Hare)Improving 1H and Q3 metrics; estimated 2021 operating loss and intent to sell asset over time Q4 occupancy dip as COVID cases rose; 2021 net operating loss before D&A ~$2.2M; appraisal $17.1M; intent to sell reiterated Recovery uneven; strategic exit maintained
Distributions & SRPDistributions stepped up to $1.25 annualized (June); SRP reinstated for all holders 7/1 (with limits) Distribution run-rate maintained; SRP continued with quarterly/monthly caps Stable
Financing capacityIncreased utilization across CF/JPM repos and new WA Credit Facility CF limit raised to $350M; repo outstanding $307.1M at YE Enhanced
LIBOR transitionFallback language; no hedging; legacy loans remain LIBOR until maturity or 6/30/23 New loans to SOFR starting 2022 Execution phase

Management Commentary

  • “We originated 17 floating rate loans totaling $364.9 million with initial funding of $327.1 million during the year ended December 31, 2021.”
  • “We increased our loan portfolio… resulting in a 51% increase… to $665.5 million during the year ended December 31, 2021.”
  • “Ultimately, we intend to sell the Renaissance O’Hare and remain focused on our core business of investing in CRE debt… the fourth quarter of 2021 results saw a decline in occupancy as COVID-19 rates increased and travel was restricted.”
  • “We continue to see significant loan demand in our target markets and asset classes.” (Q3 MD&A)

Q&A Highlights

  • No earnings call transcript found for Q4 2021; the company did not furnish an earnings call transcript in the period searched, and no call Q&A is available in filings [Search: no documents found].

Estimates Context

  • Street consensus EPS/Revenue: Not available for the company’s non-traded common; S&P Global consensus data could not be retrieved and appears not to be broadly maintained for this issuer class. We attempted to query S&P Global but were unable to obtain estimates; consensus coverage is likely limited [GetEstimates error].
  • Implication: No beat/miss analysis vs. estimates; investor focus should center on income progression (NII, REO revenue), portfolio growth, and distribution coverage .

Key Takeaways for Investors

  • Portfolio scaling: 51% loan book growth to $664.2M, 38 loans at YE21; supports higher NII into 2022, with floating-rate exposure positioned for rate hikes (98% variable) .
  • Core earnings stability: Q4 Total income and net income improved YoY; net income margin remained ~32%, indicating incremental operating leverage as deployment rises .
  • Hotel remains a swing factor: Q4 occupancy/RevPAR retraced amidst COVID; management intends to sell when conditions allow; appraisal at $17.1M provides reference for NAV sensitivity .
  • Distribution sustainability: $1.25 annualized common distribution maintained through Q4; 6.75% preferred dividend established in Q4; watch operating cash flows and origination pace to sustain payout .
  • Funding/liquidity robust: Expanded CF repo limit to $350M and maintained diversified facilities; $57.3M cash at YE21 enhances flexibility .
  • Transition to SOFR: New loans based on SOFR starting 2022 reduces benchmark risk; legacy LIBOR loans expected to transition by maturity or mid-2023 .
  • No Street estimates: With limited sell-side coverage, catalysts are internal execution (origination velocity, hotel disposition timing, credit performance) rather than “beats/misses” .