Corporate Property Associates 18 – Global Announces $8.55 Estimated NAV

December 3, 2020

Corporate Property Associates 18 – Global Incorporated (“CPA:18 – Global”) announced today the estimated net asset value per share (“NAV”) as of September 30, 2020, was $8.55 per share for Class A common stock and $8.55 per share for Class C common stock, which were 1.7% higher than the NAVs at June 30, 2020 of $8.41 per share. The increase in NAV is primarily due to the impact of foreign exchange fluctuations.

The NAV of $8.55 for both Class A common stock and Class C common stock will be used for purposes of effectuating permitted redemptions of common stock, issuing shares pursuant to the distribution reinvestment plan and payment of asset management fees to the advisor.

The September 30, 2020 NAVs were calculated by the advisor in accordance with the REIT’s current valuation policies, in which it obtains an independent rolling appraisal of the fair market value of approximately 25% of the real estate portfolio based on asset value once every quarter. The portfolio of assets to be appraised each quarter will be representative of the composition, by both geography and property type, of the entire portfolio. For each quarterly NAV calculation, the REIT also updates the latest independent real estate portfolio valuations for the following:

•  adding new acquisitions not included in the independent real estate portfolio value at their appraised values at acquisition, using independent third-party appraisal firms approved in advance by the independent members of the REIT’s board of directors;

•  adding development projects not included in the independent real estate portfolio value for either their latest quarterly carrying values for in-process projects or with a third-party appraised value for any completed project (to the extent the completed project value is not already captured in the quarterly update appraisal);

•  updating the value of any property that the advisor deems to have had a significant event during the quarter, based on an independent third-party appraisal (to the extent not already captured in the quarterly update appraisal) or the contractual gross sale price for properties that are pending dispositions; and

•  removing assets that were disposed of during the quarter.

In calculating the quarterly NAVs, the current valuation policies also provide that the REIT:

•  obtain an updated independent valuation of its debt as of quarter end;

•  make adjustments for other tangible balance sheet assets and liabilities as of quarter end;

•  use total shares outstanding for each class of shares as of quarter end; and

•  use foreign exchange rates as of quarter end in converting the local currency fair market value of international assets and liabilities to U.S. dollars.

If the amounts calculated in accordance with the REIT’s quarterly valuation policies would result in a change within +/-1% of the most recently published NAVs, the REIT does not change the NAVs from those most recently published.

Independent rolling update appraisals covering approximately 25% of the real estate portfolio each quarter were conducted as of December 31, 2019, March 31, 2020, and June 30, 2020 (the “Update Appraisals”), which, together with the rolling update appraisal conducted as of September 30, 2020 (the “September Update Appraisal”), the adjustments made by the advisor for foreign exchange rates as of September 30, 2020, the development projects and actual and pending property dispositions discussed herein, collectively formed the appraisal of the fair market value of the real estate portfolio as of September 30, 2020 (the “Appraisal”). At September 30, 2020, the fair market value of the real estate portfolio, including the note receivable at its estimated fair market value as determined by the advisor, was $2.5 billion.

In calculating the NAVs, the advisor relied in part on the Update Appraisals and the September Update Appraisal, as well as the updated estimates of the fair market value of the property-level debt as of September 30, 2020, all provided by Robert A. Stanger & Co., Inc. (“Stanger”), an independent consultant and service provider to the real estate industry. Utilizing the Appraisal, and fair market value of the property-level debt the advisor then adjusted the resulting net equity of the real estate portfolio for other net assets and liabilities of tangible or monetary value as of September 30, 2020, and an estimate of the advisor’s interest in disposition proceeds (if any), which may be paid in the future to the advisor subject to the approval of the independent members of the board of directors, based upon the Appraisal. The estimate produced by this calculation was then divided by the total shares outstanding for each class of shares as of September 30, 2020, and rounded to the nearest penny.

For the quarter ended September 30, 2020, the REIT: (i) obtained an appraisal by Stanger for approximately one quarter of the real estate portfolio and valuations for three student housing properties that completed construction during the quarter; (ii) included the latest carrying value of in-process development projects; (iii) removed from the Update Appraisals one asset in Massachusetts that was sold during the quarter; (iv) adjusted the Update Appraisal for the foreign exchange rates as of September 30, 2020; and (v) reviewed the remainder of the portfolio and deemed that there were no other material developments or significant events. As part of that review the REIT considered the contractual sale price of three self-storage assets currently under contract for sale and while the contractual sale price is above the most recent valuation contained in the Update Appraisals and the valuation as of September 30, 2019, due to current uncertainty as to the ability of the buyer to close on the transaction at the contractual price, the REIT has held these self-storage assets at the most recent appraised values. Stanger also provided a fair market valuation of the debt at September 30, 2020, as discussed in more detail below.

The determination of NAV involves a number of assumptions and judgments, including estimates of the advisor’s interest in disposition proceeds (if any). These assumptions and judgments may prove to be inaccurate. There can be no assurance that a stockholder would realize $8.55 per share of Class A common stock or Class C common stock if we were to liquidate or engage in another type of liquidity event today. In particular, the September 30, 2020 NAVs are not based on a full appraisal of the fair market value of the real estate portfolio at that date.

The methodology of determining the quarterly NAVs conforms to the Institute for Portfolio Alternatives’ Practice Guideline for Valuations of Publicly Registered Non-Listed REITs (April 2013) and fair value accounting standards under generally accepted accounting principles in the United States. In addition, the board of directors periodically reviews the quarterly NAV policies and processes.

Below is a comparison of weighted average discount rates applied to the estimated net cash flows of each property, the residual values of each property, and the residual capitalization rates applied to the properties for the June 2020 appraisals and the September 2020 appraisals.

Source:  SEC