The board of Healthcare Trust Inc., a publicly registered non-traded real estate investment trust sponsored by AR Global, has decreased its monthly distribution rate effective March 1, 2018, according to a filing with the Securities and Exchange Commission.
The current annualized distribution rate that shareholders receive is $1.45 per share on an annualized basis. Effective March 1, 2018 shareholders will receive $0.85 per share on an annualized basis.
Based on the original purchase price of $25.00 per share, this represents a change in the annualized distribution yield from 5.8 percent to 3.4 percent.
Based on the most recent net asset value per share of $21.45, the distribution rate change is from approximately 6.8 percent to 4.0 percent.
The move is intended to align distributions with current cash flows, to reposition and increase the size of the portfolio, and better position the REIT for a future liquidity event, the company said.
The updated distribution will begin accruing at $0.85 per share on an annual basis on March 1, 2018, with the first distribution payment made at the new level during the first week of April.
Healthcare Trust Inc. decreased distributions around the same time last year from $1.70 per share to $1.45 per share. Based on $25.00 per share, this represented a drop from 6.8 percent to 5.8 percent per share. Based on the 2015 NAV per share of $22.27, the reduction was a change of 7.6 percent to 6.5 percent.
“Similar to the experience of other healthcare REITs, performance of skilled nursing facilities and senior housing operating properties have been challenged by changes in reimbursement, increased supply and other factors,” the company said in the filing.
“Management responded to these challenges in 2017 by repositioning the portfolio by signing leases with new, more credit-worthy tenants and changing tenants and/or managers in 41 properties, including replacing tenants in two skilled nursing portfolios and operators of two seniors housing portfolios.”
The company expects these efforts, along with acquisitions primarily focused on medical office buildings, to improve property net operating income and compliance with debt covenants.
Healthcare Trust invests in multi-tenant medical office buildings and owns an 8.6 million-square-foot portfolio of 166 properties with a total purchase price of $2.4 billion, according to Summit Investment Research. The company’s primary offering went effective in February 2013 and closed in November 2014 after raising $2.1 billion in investor equity. The REIT continues to raise capital through its distribution reinvestment plan and shares redemption program.