The board of CNL Healthcare Properties Inc., a publicly registered non-traded real estate investment trust focused on senior housing, has approved an estimated net asset value per share of $7.38 for the company’s common stock as of December 31, 2020.
The REIT’s previous NAV per share was $7.81, as of December 31, 2019, and shares were originally priced at $10.00 each. The REIT’s 2018 NAV per share was $10.01 per share, which was adjusted to $7.99 per share after a $2.00 per share special distribution and $0.02 adjustments relating to closing costs from sales of certain assets.
Robert A. Stanger & Co. Inc., a third-party valuation firm, assisted with the valuation process and provided a range of values ($7.01 to $7.79 per share), with an approximate midpoint of $7.38 per share.
“The economic impact of the pandemic has been widespread, negatively impacting many industries, including the seniors housing segment. Across the sector, occupancies and property cash flows have been notably affected and uncertainty as to the pandemic’s effects on future operating trends persists,” said Stephen H. Mauldin, president and chief executive officer.
There was a 4.7 percent decline in the appraised value of the company’s 71 assets when compared to the appraised values for the prior year’s NAV.
Specifically, and principally due to the pandemic, the REIT indicated that 54 of its seniors housing properties managed under third-party agreements reflected lower current and projected property cash flows, along with increased time to reach occupancy stabilization targets. The REIT’s 15 triple-net leased properties reflect increased capitalization rates due to lower lease coverages. The estimated NAV also includes an adjustment for the REIT’s current projection of approximate property-level transaction costs in a hypothetical disposition scenario.
The decline in the appraised values was partially offset by company earnings in excess of distributions for 2020.
Total real estate assets as of December 2020 totaled $1.85 billion, compared to nearly $2.03 billion the previous year. Cash and cash equivalents increased from $48.4 million in 2019 to $66 million in 2020. The fair market value of debt decreased from ($686.3 million) to ($604.4 million), year-over-year.
Quarterly distributions remain at $0.0512 ($0.2048 annually) per share, or 2.78 percent annualized.
In 2017, the REIT began evaluating and exploring strategic alternatives to provide liquidity to stockholders. The following year, the board committed to a plan to sell the company’s medical office and healthcare portfolio.
“At this time, we believe the company is financially well-positioned, taking into consideration its low debt level, and solid liquidity position,” added Mauldin. “Given the market and industry disruptions last year, we were naturally forced to shift our focus away from the pursuit of larger strategic alternatives to provide further liquidity to shareholders. However, our board and its special committee continue to carefully study market data and potential options with the goal of identifying and executing liquidity alternatives that are judged to be in our shareholders’ best interests.”
CNL Healthcare Properties closed its offering in September 2015 after raising more than $1.7 billion in investor equity. The company’s real estate portfolio consisted of interests in 74 properties, including 71 senior housing communities, one vacant land parcel and two acute care hospitals classified as held for sale.