The board of Hospitality Investors Trust Inc., a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, has approved an estimated net asset value per share of $9.21 for the company’s common stock, as of December 31, 2018.
The updated valuation is an approximate 33.6 percent decrease compared to the previous $13.87 per share NAV, as of December 31, 2017. Shares were originally sold for $25.00 each.
The NAV per share is based on an estimated fair value of the company’s assets less the estimated fair value of its liabilities, divided by its shares of common stock outstanding.
The value of the company’s real estate assets decreased by approximately 16.3 percent compared to the original purchase prices of $2.3 billion, plus post-acquisition capital expenditures f of $317.5 million.
The company said that the decrease in value was primarily a result of lower estimates of occupancy and average daily rate reflecting general industry forecasts and market conditions; increased hotel supply in certain markets which has further driven down the company’s occupancy and rate estimates; higher labor, sales/marketing and other costs; and lower estimates of future capital expenditures at the hotels and expected returns on those investments.
Hospitality Investors Trust engaged an independent third-party valuation firm, which was not identified by name, to assist with the process which was performed in accordance with guidelines set by the Institute of Portfolio Alternatives (formerly the Investment Program Association). The company also consulted with a third-party debt valuation advisor.
The valuation firm provided an estimated range of $8.31 – $10.11 per share on a fully diluted basis, with a midpoint of $9.21 per share.
Hospitality Investors Trust invests in select-service lodging properties in North America branded by premium national hotel brands. The REIT’s offering was declared effective in January 2014 and suspended sales activities in November 2015 after raising $903 million in investor equity. As of the fourth quarter of 2018, the company’s $2.3 billion portfolio was comprised of 144 properties. The company severed ties with its external advisor, an affiliate of AR Global, and became self-managed on March 31, 2017.