Cole Credit Property Trust Announces Lower NAV Per Share
April 3, 2018 | James Sprow | Blue Vault
On March 30, 2018, the Board of Directors of Cole Credit Property Trust V, Inc. (“CCPT V” or the “Company”), a publicly registered non-listed real estate investment trust (“REIT”) focused on investing in high-quality, income-producing necessity retail properties net leased to creditworthy tenants under long-term leases, announced an estimated per share net asset value (“NAV”) of the Company’s Class A and Class T common stock of $22.18 as of December 31, 2017. This is the third valuation that the Company has conducted and is 11.3% below the initial offering price of $25.00.
“While the perceived value of some retail real estate has shifted, impacting CCPT V’s valuation, this portfolio continues to perform well,” said Nathan DeBacker, Chief Financial Officer of CCPT V. “CCPT V maintains a 98.9% occupancy rate, a strong tenant line-up and high-quality real estate. Many of CCPT V’s tenants, including service providers, discount retail and restaurants, don’t directly compete with online retailers. We will look to grow the portfolio with a focus on creditworthy, necessity-based retail and services that support the needs of local communities.”
The Company engaged Duff & Phelps, LLC (“Duff & Phelps”), an independent global advisory and corporate finance consulting firm that specializes in providing real estate valuation services, to assist the Board with determining an estimated per share NAV and a valuation range of CCPT V. Using the NAV Methodology, Duff & Phelps arrived at a valuation range of $20.87 to $23.39 per share. The estimated per share NAV of $22.18 for Class A and Class T shares was determined and approved by the Board based on the recommendation of its Valuation Committee, which is comprised solely of independent directors, including the independent Chairman of the Board.
The updated estimated per share NAV for Class A and Class T shares was based upon the estimated market value of CCPT V’s assets, less the estimated market value of the Company’s liabilities, divided by the total shares outstanding, and was performed in accordance with the valuation guidelines established by the Investment Program Association Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs. The estimated per share NAV does not reflect any “portfolio premium,” nor does it reflect an enterprise value for the Company. The Board intends to determine an updated estimated per share NAV on at least an annual basis.
As of March 26, 2018, the REIT had approximately 16.1 million shares of common stock outstanding (14.5 million Class A Shares and 1.6 million Class T Shares), held by a total of 8,125 stockholders of record.
To date, CCPT V has paid 47 consecutive monthly distributions to its stockholders, with a current distribution rate equal to an annualized amount of $1.575 per share for Class A shares and Class T shares (less, in the case of Class T shares, the per share distribution and stockholder servicing fees that are payable with respect to the Class T shares). The distribution amount per share declared by the Board is not affected by the determination of the NAV. Base upon the original offering price of $25.00 per share, the current distribution yield is 6.30%.
About Cole Credit Property Trust V, Inc.
CCPT V is a public, non-listed REIT formed in 2014 that acquires and manages income-producing retail commercial real estate primarily leased to creditworthy tenants under long-term, net leases. CCPT V seeks to provide access to high-quality retail real estate assets, providing current income, reduced overall portfolio volatility and the potential for capital appreciation for its shareholders. CCPT V is operated by CCO Group, LLC, a subsidiary of CIM Group. The REIT began its public offering in March 2014, and has raised gross offering proceeds of $406.9 million as of December 31, 2017, including proceeds from the DRIP. During 2017, the REIT acquired 20 properties for an aggregate purchase price of $133.9 million. As of December 31, 2017, it owned 136 properties with approximately 3.2 million rentable square feet of commercial space located in 33 states, which were 98.9% leased and had a weighted average remaining lease term of 10.5 years.
About CIM Group
Established in 1994, CIM is a vertically-integrated owner and operator of real assets for its own account, and on behalf of its partners and co-investors seeking to invest in urban real assets, net-lease assets, and other associated credit strategies, with a principal focus on North America. CIM’s real assets include urban residential, commercial, retail, hospitality, debt, and infrastructure investments as well as U.S.-based retail, office and industrial net-lease.
CIM Group acquired all the issued and outstanding shares of common stock of Cole Capital Advisors, Inc., the owner of the REIT’s external advisor, from VEREIT OP. The transaction was completed on February 1, 2018
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