The board of Cottonwood Multifamily REIT I Inc., a Regulation A+ real estate investment trust sponsored by Cottonwood Residential, approved an updated net asset value per share of $12.21 for the company’s common stock as of September 30, 2019.
The new valuation represents an approximate 8 percent increase from the previous NAV per share of $11.31 and a 22 percent increase from the original purchase NAV of $10.00 per share. The current distribution rate remains unchanged at $0.575 per share on an annualized basis.
Cottonwood Multifamily REIT I owns a portfolio of three multifamily properties located in Tampa, Florida; Atlanta, Georgia and Charlotte, North Carolina purchased for a combined $140.9 million.
The REIT owns a 90 percent interest in the properties, which were purchased in joint ventures with affiliates of Cottonwood Residential O.P LP. The properties have a combined appraised market value of $164.2 million as of September 30, 2019 and were appraised by Cushman & Wakefield, Newmark Knight Frank, and CBRE.
The portfolio’s loan-to-value is 57 percent based on the new appraised values, a reduction from the initial LTV of 64 percent.
“We believe that the value creation we have seen thus far in the REIT’s lifecycle is a testament to our investment thesis of acquiring high quality assets in enduring locations with strong demographics and job growth” said Adam Larson, chief financial officer of the REIT. “Furthermore, we are encouraged by the positive impact that our pioneering ‘no upfront load’ structure has had on investment performance.”
The company noted that the NAV considered metrics such as cash flows, comparable sales metrics, capitalization rates, loan balances, interest rates and financial projections.
Cottonwood Multifamily REIT I commenced its $50 million private offering in May 2016 and had sold all of the 5 million shares of its common stock by April 2017. Thereafter, Cottonwood launched two other Regulation A+ offerings, Cottonwood Multifamily REIT II and Cottonwood Multifamily Opportunity Fund, which also became fully subscribed.