The Parking REIT Announces $24.61 Estimated NAV Per Share
May 30, 2018 | James Sprow | Blue Vault
On May 29, 2018, the Board of Directors of The Parking REIT, Inc., a publicly registered non-traded real estate investment trust, determined that the Company’s estimated net asset value (“NAV”) was approximately $161,174,000 or $24.61 per common share as of May 29, 2018. Shares in the initial public offering were sold at $25.00 per share. In determining an estimated value per share of the Company’s common stock, the Company’s board of directors relied upon information provided by MVP Realty Advisors, LLC, (the “Advisor”) and the Board’s experience with, and knowledge of, the Company’s real property and other assets.
The Company is providing the estimated NAV per common share to assist broker-dealers and stockholders pursuant to certain rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The objective of the Board in determining the estimated NAV per common share was to arrive at a value, based on recent available data, that it believed was reasonable based on methods that it deemed appropriate after consultation with the Advisor. The Advisor performed the valuation of the Company’s common stock using as a guide Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association in April 2013. The estimated value per share is based on (x) the estimated value of the Company’s assets less the estimated value of the Company’s liabilities and preferred stock divided by (y) the number of outstanding shares of the Company’s common stock, all as of May 29, 2018.
Starting May 29, 2018, the NAV of $24.61 per common share will be used for purposes of effectuating permitted redemptions of common stock if the Board elects to reinstate the Company’s share repurchase plan. The NAV of $24.61 per common share will also be used for issuing shares pursuant to the distribution reinvestment plan if and when the Board resumes payment of distributions to common stockholders.
Suspension of Share Repurchase Plan
The Company also announced that on May 29, 2018, the Board suspended its share repurchase plan, other than for repurchases in connection with a shareholder’s death. In accordance with the share repurchase plan, the suspension of the share repurchase plan will take effect on June 28, 2018, which is 30 days after the date of the Form 8-K providing notice of suspension. The Company plans to utilize the cash savings to further its business operations. The Board may in the future reinstate the share repurchase plan, although there is no assurance as to if or when this will happen.
The following is a summary of the valuation methods used on the Company’s assets and liabilities, and the results of the valuation.
Real Estate Investments:
As of May 29, 2018, the Company had ownership interests in 46 parking assets. The Board determined the fair value of the Company’s investments in parking assets to be approximately $331,757,000 as of that date. This represents a 9.84% increase over the aggregate purchase price of $302,048,000. This determination was based on appraisals of the fair value of the Company’s investments in parking assets as of that date. The Company engaged Parking Property Advisors, LLC, an independent third party valuation firm, to provide it with a valuation analysis for 43 of the properties. Of the other three properties not valued by the firm, one was purchased in February 2018 and was valued based on the appraisal at the time of purchase, and in regards to the two other properties, the Company used the most recent book value determined by Houlihan Lokey at the time of the merger between MVP REIT Inc. and MVP REIT II, Inc. on December 15, 2017.
In determining the market value of the parking assets, Property Parking Advisors considered typical approaches to value in developing and justifying the respective value conclusions namely, Income Capitalization and Land Value Sales Comparison approaches. Thirty-seven properties were valued based upon the Income Capitalization approach, with significant analysis provided on the contract rent paid by the operator. Specific expenses were based on local custom (property taxes) as well as the terms of the operator agreement. Six properties were valued based upon the Land Value Sales Comparison approach.
Other Assets and Liabilities. The Board then reviewed with its Advisor the Company’s other assets and liabilities, consisting primarily of cash and cash equivalents, restricted cash, deferred costs, accounts receivable, and prepaid expenses and other assets. These other assets and liabilities, as recorded in the balance sheet per US GAAP, were considered by the Board to equal to the fair value as of May 29, 2018.
Estimated Value Per Share. The estimated value per share was based upon 6,550,282 shares of the Company’s common stock outstanding as of May 29, 2018. Although the estimated value per share has been developed as a measure of value as of May 29, 2018, the estimated value per share does not reflect (i) a liquidity discount for the fact that the shares are not currently traded on a national securities exchange and the Company’s share repurchase program provides only limited liquidity , (ii) a discount for the non-assumability or prepayment obligations associated with certain of the Company’s debt, or (iii) a discount for the Company’s corporate level overhead.
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