How Has Steadfast Performed in the Nontraded REIT and Closed-End Fund Industries?
September 19, 2018 | James Sprow | Blue Vault
With the recent report by DI Wire that the capital markets division of Steadfast Companies had laid off multiple employees and is leaving the nontraded direct investment space for the foreseeable future, this is an appropriate time to evaluate Steadfast’s performance in the industry.
According to Blue Vault, Steadfast has sponsored three nontraded REIT programs and one nontraded closed-end fund. The first nontraded REIT program’s offering, Steadfast Income REIT, Inc. was effective in July 2010, closed its offering in December 2013 having raised $745.4 million, including DRIP proceeds during the offering. Steadfast Apartment REIT, Inc. followed with an offering in December 2013 and raised $724.8 million, including DRIP proceeds, before closing the offering in March 2016. The latest offering was Steadfast Apartment REIT III, Inc. which was declared effective in February 2016 and had raised $203.6 million in gross offering proceeds including DRIP proceeds and closed the offering August 31, 2018. The REIT continues to offer shares via the DRIP.
Steadfast Apartment REIT
The REIT had a portfolio of 34 multifamily properties as of June 30, 2018, consisting of 11,601 apartment units. The REIT had total assets of $1,421.2 million. The REIT utilized $993.8 million in debt for a debt ratio of 69.9% at a weighted average interest rate of 4.12%.
According to Blue Vault, the REIT has consistently paid a 6.00% annualized distribution, based upon the original $15.00 per share offering price, since 2014. Effective April 1, 2018, the NAV per share was $15.18.
Steadfast Income REIT
The REIT had a portfolio of 39 multifamily properties and one joint venture as of June 30, 2018, consisting of 10,622 apartment homes and 21,130 square feet of commercial space. The REIT’s total assets were $1,094.6 million, partially financed with $771.6 million in debt, for a debt ratio of 70.5% and a weighted average interest rate of 4.10%.
According to Blue Vault, the REIT paid a distribution in Q2 2018 at that annualized rate of 6.00% based upon the $10.24 offering price (6.14% based upon the original offering price of $10.00). Prior to Q2 2018, the REIT was paying an annualized distribution at 7.00%, continuously since 2014.
Steadfast Income REIT, Inc. (“SIR”) announced in November 2017 that it had entered into a joint venture arrangement with Blackstone Real Estate Income Trust, Inc. (“BREIT”) with respect to 20 of the 63 apartment communities owned by SIR. In the transaction, BREIT was to acquire a 90 percent ownership interest in the 20-apartment community portfolio for approximately $460.8 million in cash and debt assumption. SIR would continue to own 10 percent of the portfolio. Affiliates of SIR would continue to provide property management services for the properties in the joint venture.
Steadfast Income REIT on May 9, 2018, announced an estimated value per share of the Company’s common stock of $9.84 which represents the estimated value per share of the Company’s common stock of $10.84 as of December 31, 2017, less the special distribution of $1.00 per share that was paid in April 2018. The special distribution represented a return of capital.
Steadfast Apartment REIT III
As of June 30, 2018, the REIT had a portfolio of ten multifamily properties with 2,775 units. The REIT’s total assets were $416.2 million, with $189.2 million in debt financing, a debt ratio of 67.3%, at a weighted average interest rate of 4.25%. The REIT has issued three classes of common shares, Class A, Class R, and Class T, with annualized distribution rates of 6.00%, 6.45%, and 5.17%, respectively, net of stockholder servicing fees.
Stira Alcentra Global Credit Fund
In May 2017 Steadfast began an offering for a nontraded closed-end fund called Stira Alcentra Global Credit Fund. Through September 7, 2018, this offering had raised $36.2 million. As of August 31, the fund had a net asset value of its Class A shares of $9.05 and a distribution yield based on the NAV of 7.12%. On September 18, Stira Alcentra Global Credit Fund announced the suspension of its continuous public offering and suspended its distribution reinvestment program. The board announced that the decision is due to market conditions not being conducive to continuing the offering and it plans to consider alternatives that it believes are in the best interest of shareholders. As of June 30, 2018, it reported total assets of approximately $28.7 million, with approximately $21.9 million invested in 82 portfolio companies, with 65.5% of the fair value invested in senior secured first lien loans, 24.9% in corporate bonds, and 9.6% in senior secured second lien loans.
Steadfast Companies is a group of integrated real estate investment, management, and development companies, and through its affiliate, Stira Capital Markets Group, designs alternative investments to help investors diversify their portfolios while potentially enhancing their returns and balancing their risk profile. Steadfast Companies was founded in 1994 by Rodney Emery. Its headquarters is in Irvine, California.
Since its inception, Steadfast Companies has acquired, developed and managed approximately $7.0 billion of real estate. Today Steadfast Companies owns and/or operates a diverse portfolio valued at approximately $5.1 billion, which is comprised of over 160 properties across the United States and Mexico.
The current portfolio includes over 39,000 apartment units as well as three senior living developments and three resort hotels.
Sources: Steadfast, Blue Vault, SEC
Learn more about Steadfast Companies on the Blue Vault Sponsor Focus page
I have been using Blue Vault Partners for the past five years. I have found them to be a valuable, unbiased resource when it comes to evaluating and comparing non-traded REITs. The reports help me analyze which sponsors are doing a responsible job of managing their offerings. This allows me to limit my REIT recommendations to only the most competitive products, and then track those REITs throughout their life cycle.