The board of Strategic Student & Senior Housing Trust Inc., a publicly registered non-traded real estate investment trust sponsored by SmartStop Asset Management LLC, has declared a $6.08 net asset value per share for its Class A, Class T, Class W, Class Y and Class Z shares of common stock, as of June 30, 2020.
The NAV per share is based on the estimated value of the REIT’s assets less the estimated value of its liabilities, or net asset value, divided by the number of shares outstanding, calculated as of June 30, 2020.
Duff & Phelps assisted with the valuation process and calculated a $5.34 to $6.86 per share valuation range with a midpoint of $6.08. Shares were originally priced at $10.00 each.
“While it is difficult to quantify the impact of the COVID-19 pandemic on the estimated per share NAV, the company was significantly and negatively impacted by COVID-19,” the company stated in a filing with the Securities and Exchange Commission. “On March 30, 2020, based in part on market feedback from the company’s participating broker-dealers that investors were unwilling to invest in a co-living student and senior housing vehicle, the company suspended its public offering, which negatively impacted the company’s ability to raise additional capital to achieve economies of scale and reduce debt.”
The company added that it experienced lower operating revenues and increased costs during the six months ended June 30, 2020 as a direct result of COVID-19.
In June 2020, the company terminated its dealer manager agreement with its former dealer manager, Select Capital Corporation. As a result, the company said, it was unable to raise additional funds to continue to invest in student and senior housing communities, reduce debt on its current portfolio, or diversify its real estate holdings and achieve economies of scale.
In a letter to shareholders, the REIT indicated that occupancies at its senior housing communities fell sharply by 6 percent from March 31, 2020 to June 30, 2020, resulting in an approximately $400,000 reduction in net operating income of its senior housing portfolio quarter-over-quarter.
The company also noted that it incurred more than $580,000 of COVID-19 related expenses through June 30, 2020. These included purchases of personal protective equipment for staff, increased housekeeping and cleanliness protocols and CDC approved equipment and cleaning solutions to disinfect common areas.
At its student housing properties, the combination of COVID-19 related job losses and universities transitioning to 100 percent online learning in the spring of 2020, caused a majority of its student residents to vacate their units and return home to complete their studies, the REIT stated.
Thus, second quarter collections at its Fayetteville and Tallahassee communities averaged approximately 97 percent and 94 percent, respectively, which has negatively impacted student housing leasing and related revenues by approximately $75,000. Leasing for the 2020-2021 academic year averaged 96.5 percent occupancy at the two properties.
The impact of COVID-19 on our senior housing portfolio is creating the most concern…, the REIT stated. “Specifically, prospective new tenants and family members are hesitant to move loved ones in a community due to COVID-19 fears and limited visitation. Until rapid testing utilization increases and new vaccines are proven effective for seniors, we expect occupancies at our communities will be negatively impacted.”
Strategic Student & Senior Housing Trust invests in Class A student housing and senior housing communities and owns two student housing properties and four senior housing properties. The REIT raised approximately $93 million from its private offering which ended in March 2018, and its public offering was declared effective in May 2018. As of August 2020, the company raised $17.4 million in investor equity in its primary public offering.