Home Alts News Research Firm Says ARC NYC REIT Investors Should “Brace for Impact” with...

Research Firm Says ARC NYC REIT Investors Should “Brace for Impact” with the Upcoming Valuation

Summit Investment Research, an investment research and due diligence firm, published a report stating that investors in ARC New York City REIT should brace for a valuation decline of 50-70 percent when it completes its updated valuation, which will likely occur this Fall.

The board of ARC New York City REIT approved its first estimated net asset value of $21.25 per share in October 2016, which Summit noted was “based on aggressive assumptions for their terminal cap rate and discount rate.” The research firm said that the board did not disclose the projected rent growth, which is the other key assumption for their discounted cash flow valuation. Shares were originally sold for $25.00 each.

As reported by The DI Wire last week, the board of Hospitality Investors Trust, a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, unanimously approved the estimated NAV of $13.20 per share, a nearly 39 percent decline from its previous NAV of $21.48 per share. Earlier this year, the company changed its name after transitioning to a standalone self-managed REIT following an investment from an affiliate of Brookfield Strategic Real Estate Partners II.

In its report, Summit noted that “the aggressive and unsupportable initial valuations for both non-listed REITs raise significant concerns about board independence and oversight.”

In other ARC NYC REIT news, dissident shareholder Cove Partners III LLC issued a letter to fellow investors earlier this month urging them to vote against certain charter amendments being proposed at the upcoming annual meeting of shareholders on June 27th.

American Realty Capital New York City REIT is a non-traded real estate investment trust focused on properties located in the five boroughs of New York City, with a focus on Manhattan. The company closed its initial public offering in May 2015 and had raised a total of $764 million in investor equity, as of March 31, 2016. The company owns six properties valued at $785 million.

Summit Investment Research has been active since April 2016 and covers non-traded REITs, business development companies, interval funds, and listed REITs (that acquired non-traded REITs or were once non-traded). The company’s research can be utilized by a variety of industry clients including financial advisors, registered investment advisors, broker-dealers, sponsors, service providers like law firms, due diligence firms, industry organizations, and news organizations, and institutions.

Click here to visit The DI Wire directory page.