Steadfast Income REIT, a publicly registered non-traded real estate investment trust, has updated the net asset value per share for the company’s common stock to $10.84 per share. The company’s previous NAV per share was $11.65, as of December 31, 2016, which represents a decrease of nearly 7 percent.
In a letter to shareholders and a video to advisors outlining the reasons for the decline, the company explained that oil price volatility in recent years impacted markets like Houston and Oklahoma City where it maintains a significant presence. The company believes that these markets are improving and continue to exhibit upside potential.
Additionally, the REIT sold properties where the proceeds had not been deployed before the year-end valuation, and uninvested cash creates a drag on funds from operation until deployed.
Other reasons include transaction costs incurred from the joint venture sale with Blackstone REIT, 2017 redemptions calculated at the previous $11.65 NAV per share, and distributions were paid in cash rather than the industry average of 50 percent cash and 50 percent shares of common stock.
The board lowered the annual distribution rate from 7 percent to 6 percent based on the purchase price of $10.24 per share. The new distribution rate started accruing on April 1st and will be paid in May.
The board also authorized a tender offer for up to $100 million shares of common stock priced at $9.00 per share for shareholders who desire immediate liquidity. In connection with the offer, the company’s share repurchase program will be temporarily suspended at the end of the month.
To date, Steadfast Income has provided shareholders with returns of between $2.93 and $5.29 per share on offering prices of $10.00 to $10.24 per share, depending on the timing of the initial investment.
Steadfast Income REIT invests primarily on the multifamily sector, including stable, income-producing and value-added properties. The company launched its initial public offering in July 2010 and concluded its sales of shares of common stock in December 2013 after raising $745 million in investor equity. The company owns a multifamily property portfolio of 48 properties with a total purchase price of $1.2 billion.