The board of CNL Healthcare Properties, a publicly registered non-traded real estate investment trust, has approved a $2.00 per share special distribution to shareholders following the recent sale of 59 assets, including 55 medical office buildings to Welltower Inc. (NYSE: WELL) for $1.25 billion. The board also updated the company’s estimated net asset value per share and adjusted the quarterly distribution rate.
Net sales proceeds from the Welltower transaction after closing costs, repayment of related debt, pro- rations and other adjustments was approximately $550 million. The 55 properties were originally purchased for a combined $1.01 billion.
The board of directors approved the use of these remaining proceeds to rebalance corporate borrowings and make the $2.00 per share special distribution. The distribution will total $350.6 million and be paid on or about May 28.
This is the first special distribution made by CNL Healthcare Properties and follows the June 2018 announcement of the formation of a special committee of its independent directors and the company’s focus on the exploration of strategic alternatives to provide liquidity to shareholders.
The board also updated the REIT’s estimated NAV per share to $7.99 as of December 31, 2018.
The adjusted NAV reflects the sale of the 59 properties, the special distribution and a reconciliation of the actual closing costs versus prior estimates regarding the asset sales. The company noted that it does not plan to undertake another estimated NAV per share process until year-end 2019.
The board also declared a regular distribution of $0.0512 per share for the second quarter, reduced from the $0.1164 per share quarterly distribution that has been in effect since the third quarter of 2017.
The company said that the updated distribution reflects the its smaller portfolio and a natural reduction to the earnings asset base and forward-looking cash generation from operations expectations.
“In recent weeks, we have made constructive and definable progress toward providing liquidity to our shareholders as we have successfully sold 59 of our healthcare assets and made our first special distribution,” said Stephen Mauldin, president and CEO of CNL Healthcare Properties. “Since we are still relatively early in our carefully orchestrated strategic alternatives process and have much left to do, our board of directors and management team continue to be wholly focused on driving incremental value creation and realization prospects through our remaining seniors housing-centric portfolio for the benefit of our investors.”
CNL Healthcare Properties closed its offering in September 2015 after raising more than $1.7 billion in investor equity. The company’s portfolio is comprised of 83 properties, 11 of which are acute and post-acute care assets that are marked as held for sale.