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Understanding CNL Healthcare Properties’ New $10.32 NAV Per Share

February 13, 2018

Understanding CNL Healthcare Properties’ New $10.32 NAV Per Share

February 13, 2018 | by James Sprow | Blue Vault

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CNL Healthcare Properties, a nontraded REIT focused on seniors housing and healthcare facilities, announced on February 12 an estimated net asset value per share (NAV) of $10.32, as of December 31, 2017. The valuation included a $0.10 deduction per share for estimated transaction costs in the event of one or more transactions involving the Company’s portfolio of assets to provide liquidity to the Company’s shareholders. The Company’s previous NAV per share was $10.04 as of December 31, 2016.

In connection with the approval of the 2017 NAV, the Board approved a change in the purchase price for shares under the Company’s DRIP to $10.32. Quarterly distributions remain unchanged during the first quarter 2018 at $0.1164 per share, which represents an annualized 4.51 percent of the 2017 NAV per share (4.66 percent based upon the original $10.00 offering price per share). The Company will pay first quarter distributions on or about March 12, 2018.

The Company engaged CBRE Capital Advisors (CBRE Cap), an independent investment banking firm, to conduct the valuation. A committee of independent board members recommended the estimated net asset value per share of $10.32 which was within the range of values provided by CBRE Cap. That range for the Company’s estimated 2017 NAV was from $9.79 to $10.81 per share, including the $0.10 deduction for estimated transaction costs which was not included in the 2016 estimated NAV.

The main factors that impacted the Company’s estimated 2017 NAV per share as compared to the Company’s prior NAV determination as of December 31, 2016 are (i) an increase in net operating income from the Company’s real estate assets due to factors including continued stabilization of development and lease-up properties, (ii) a decline in the market terminal capitalization rates for MOB properties used to calculate the terminal value of assets at the end of the discounted cash flow analyses, (iii) a decline in the discount rates for MOB properties used to discount future cash flows back to present value in the discounted cash flow analyses, and (iv) the inclusion of estimated transaction costs in the event of one or more transactions involving the Company’s portfolio of assets to provide liquidity to the Company’s stockholders.

Last year the Company began evaluating strategic alternatives to provide liquidity to the Company’s shareholders. The Company continues to evaluate strategic alternatives for an outcome in the best interests of its shareholders and will announce publicly the Company’s formation of a special committee and/or engagement of an investment banker when either occurs.

As of December 31, 2017, the Company’s real estate portfolio consisted of interests in 143 assets, including 72 seniors housing communities, 54 medical office buildings, 12 post-acute care facilities and five acute care hospitals. Five of its 72 seniors housing communities were owned through an unconsolidated joint venture and one was comprised of unimproved land. The properties are geographically diversified in 34 states. At December 31, 2016, the Company had 143 properties, six of which were under development.

The estimated value of the Company’s wholly owned and partially owned operating assets and vacant land was $3.421 billion as of December 31, 2017 compared to $3.289 billion as of December 31, 2016, an increase of approximately $0.79 per share. The fair value of the Company’s debt increased approximately $0.49 per share in the latest valuation.

 

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