CNL Healthcare Properties Suspends Distribution Reinvestment Program
June 26, 2018 | James Sprow | Blue Vault
In light of its decision to proceed with the exploration of its strategic alternatives process, the CNL Healthcare Properties, Inc. has determined to suspend its distribution reinvestment plan (“DRP”), effective as of July 11, 2018. As a consequence of the suspension of the DRP, beginning with the third quarter 2018 distributions, which will be payable on or about September 11, 2018, no further automatic distribution re-investment is expected to take place under the DRP, and stockholders who are participants in the DRP will receive cash distributions instead. For IRAs and other qualified accounts, distributions will be remitted to the stockholder’s custodian of record.
Since inception, the REIT has paid out 44% of estimated MFFO in cash distributions, excluding DRP, and this was 44% for the last four quarters, a sustainable cash distribution rate. With the suspension of the DRP, the percentage of MFFO that will be paid in cash distributions will likely double, based upon current DRP participation, according to Blue Vault.
On April 3, 2018, the Board of Directors of CNL Healthcare Properties, Inc. formed a special committee consisting solely of independent directors to consider possible strategic alternatives, including, but not limited to (i) the listing of the company’s or one of its subsidiaries’ common stock on a national securities exchange, (ii) an orderly disposition of the company’s assets or one or more of the company’s asset classes and the distribution of the net sale proceeds thereof to the stockholders of the company and (iii) a potential business combination or other transaction with a third party or parties that provides the stockholders of the company with cash and/or securities of a publicly traded company.
The REIT has also determined to suspend its stock redemption plan effective as of July 11, 2018. The REIT processed all redemption requests received in good order up until the close of business on May 31, 2018 and will redeem shares totaling approximately $10.9 million in accordance with the terms of the redemption plan. The remaining unsatisfied redemption requests, together with any other new requests received through July 11, 2018, will be placed in the redemption queue and will remain there until such time, if at all, that the Board reinstates the Redemption Plan in accordance with its terms.
According to Blue Vault’s Q1 2018 Nontraded REIT Industry Review, CNL Healthcare Properties, Inc. had over $2.77 billion in total assets as of March 31, 2018, invested in 143 healthcare properties, including 72 seniors housing properties, 54 MOBs, 12 post-acute care facilities and five acute care hospitals. As of December 31, 2017, the estimated NAV per share was $10.32 and distributions, based upon the original $10.00 share price, were 4.66% annualized. During the three months ended March 31, 2018, the REIT declared cash distributions of $20.3 million, of which $9.2 million were paid in cash and $11.1 million were reinvested pursuant to the DRP.
Sources: SEC, Blue Vault
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