InPoint Commercial Real Estate Income, Inc. (ICRL) stock intrinsic value fair value estimate & owner earnings analysis

InPoint Commercial Real Estate Income is a Maryland real estate investment trust, externally managed by Inland InPoint Advisor, that lends against commercial real estate, mainly floating-rate first mortgage loans. This valuation is for its common shares. The common shares are not listed on any exchange, and the company says it has no requirement to pursue a liquidity event by any date. Only its 6.75% Series A preferred stock trades (New York Stock Exchange, ICR PR A). The value below is what a common share appears to be worth, not a price at which it can readily be sold. What the business looks like now. The company is shrinking and holding more property than loans. At the end of 2025 its loans stood at $351.8 million, down from $563.1 million a year earlier, while real estate acquired through foreclosure rose from $39.6 million to $93.3 million. During 2025 borrowers repaid $99.6 million of loans, the company sold a $47.5 million Houston office loan at an $8.4 million loss, and two loans were foreclosed (carrying value $61.8 million). New lending was only $2.0 million. Management says it is studying selling the foreclosed properties and possibly lending the proceeds again, aiming for a future strategic transaction, with no assurance it will succeed. We give no value to that redeployment, because the company has not been making new loans. Earning power. We measure owner earnings as operating cash flow, less working-capital swings, less stock compensation and property capital spending, and then less the fixed dividends on the preferred stock, which are paid before common holders. Per common share this gives about $0.27 (2017, a start-up year), $0.82 (2018), $1.18 (2019), $0.97 (2020), $0.85 (2021), $0.89 (2022), $1.49 (2023), $0.99 (2024) and $0.40 (2025). For 2025: operating cash flow $11.4 million, less $0.35 million of working-capital inflow, $0.03 million of stock compensation, $0.93 million of property spending and $5.98 million of preferred dividends leaves $4.1 million, or $0.40 on 10.1 million shares. The five-year median since the preferred stock was issued (2021 to 2025) is $0.89, but we do not use it as the level, because the loan book has since shrunk by more than a third and part of the assets are now properties. Owner earnings fell about 59% in 2025. We start the base case at $0.37 for the first year, slightly below 2025, not higher: the 2025 figure was earned on larger average balances than the year-end balance sheet carries. Provisions for credit losses are added back in cash flow ($16.9 million in 2023), so we charge losses explicitly in the cases below through the value we assume each asset realizes. What the cases assume. The common shares own what remains after $270 million of loan financing (repurchase agreements and loan participations sold), a $23.9 million mortgage loan, and the $88.6 million liquidation value of the preferred stock. Management's own estimate of net asset value attributable to common was $143.0 million, or $14.13 per share, at year-end 2025. Common distributions were $12.6 million in 2025 (about $1.25 per share), well above owner earnings. Our cases value the assets as they are worked out over the next few years, with income earned meanwhile at about 4%. - Base case, $11.50 per share: loans realize about 93% of management's value over four years and foreclosed properties about 88% over four years. Those haircuts reflect losses the company actually took: $9 million of charge-offs in 2025, and an $8.4 million loss on the Houston loan sale. Income drifts from about $0.37 a share in year one to roughly zero in year three and slightly negative in year four, because the preferred dividend is fixed while the assets shrink. - Bear case, $8.40 per share: loans realize 80% and properties 70%, over five to six years, with lower income. The named risk is more foreclosures and write-offs of the kind seen in 2023 (a $16.9 million credit-loss provision and a $6.9 million asset impairment), 2024 and 2025, plus a slower sell-down of properties that produce little income. - Bull case, $13.20 per share: loans and properties realize management's full estimate within three years, with no redeployment, since new lending has not resumed. What would make this wrong. If the foreclosed properties sell at or above management's estimates, value moves toward net asset value; if further loans go bad, toward the bear case. Management's plan to relend proceeds, if it is carried out, would be additional upside not counted here. The company also has an accumulated deficit of $115.1 million against $341.4 million of paid-in capital, so past credit losses have been substantial. Margin-of-safety price. Given the shrinking, leveraged balance sheet, the fixed preferred claim ahead of common, and the absence of a market for the common shares, the margin-of-safety price is set well below the base case, at about $7.50 per share.