Healthcare Trust Lowers NAV to $20.25 from $21.45
April 3, 2018 | James Sprow | Blue Vault
On March 29, 2018, the independent directors of Healthcare Trust, Inc. who comprise a majority of the board, with Edward M. Weil, Jr. abstaining, unanimously approved an Estimated Per-Share NAV as of December 31, 2017 equal to $20.25 based on the estimated fair value of the Company’s assets less the estimated fair value of the Company’s liabilities, divided by 91,768,014 shares of common stock outstanding on a fully diluted basis as of December 31, 2017. There have been no changes between December 31, 2017 and March 29, 2018, that the Advisor believes would materially impact the overall Estimated Per-Share NAV.
The reduction in the NAV is mainly attributable to an increase in the fair value of the REIT’s debt from $6.97 per share as of December 31, 2016, to $10.33 per share as of December 31, 2017. The REIT’s real estate assets were valued at $29.82 per share as of December 31, 2017, up from $28.24 per share as of December 31, 2016.
The Company engaged Duff & Phelps, LLC (“Duff & Phelps”), an independent third-party real estate advisory firm, to perform appraisals of the Real Estate Assets as of the Valuation Date and provide a valuation range for each Real Estate Asset. In addition, Duff & Phelps was engaged to review and incorporate its estimate of a range of net asset values of the Company included in its report the Company’s market value estimate regarding other assets and liabilities as of the Valuation Date.
Duff & Phelps provided a low end, midpoint and high end of a range of capitalization rates resulting in an Estimated Per-Share NAV range equal to $18.38 to $20.55 per share on a fully diluted basis. The midpoint of that range was $19.49, but the Board approved an Estimated NAV Per Share of $20.25, above the midpoint and closer to the higher estimate.
According to the REIT’s 8-K filed on March 29, 2018, as part of their determination to approve an Estimated Per-Share NAV between the midpoint and the high end of the range included in the Duff & Phelps Report, the independent directors considered that the negative effect on Estimated Per-Share NAV of paying distributions to the Company’s stockholders that exceeded cash flows from operations would be significantly less in future periods due to the fact that, in February 2018, the Company decreased the rate at which it pays distributions from an annual rate of $1.45 per share to $0.85 per share. The independent directors of the Board also considered the fundamentals of the Real Estate Assets, including geographic location, stabilization and credit quality of tenants.
As set forth in the SRP, the price per share for shares of common stock repurchased by the Company pursuant to the SRP will be the most recent Estimated Per-Share NAV at the time of repurchase for investors that have held the shares for at least one year, subject to certain conditions and limitations. As stated in the amended and restated SRP effective on July 14, 2017, only repurchase requests made following the death or qualifying disability of stockholders that purchased shares of the Company’s common stock or received their shares from the Company (directly or indirectly) through one or more non-cash transactions would be considered for repurchase.
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