The board of CNL Healthcare Properties REIT (CNL) has been approved the estimated net asset value (NAV) of $7.37 for its common stock. Its last approved NAV was $7.38 which had been approved on the 31st of December, 2020. The marginal decline was attributed to “a slight decline in balance sheet assets, partially offset by lower estimated transaction costs.”
CNL also announced a cash distribution of $0.0256 per share for the first quarter of 2022 representing a 50% reduction in cash distributions quarter on quarter. It is expected to be released at the end of the quarter with the record date being the 2nd of March, 2022.
The dividend reduction was explained as “the direct result of various factors including persistent COVID-19 impacts on industry performance, magnified and real-time inflation levels that we are all experiencing, plus overarching geopolitical and broader market concerns stemming from the troubling Ukraine/Russia state of affairs.”
It should be noted that many investors are seeing a dramatic difference in the “estimate NAV” price and what they receive when they sell the REIT on the secondary market. As result, Haselkorn & Thibaut, P.A. have opened an investigation into firms that sold CNL Healthcare Properties REITs. Investors are encouraged to call our experienced investment fraud lawyers at 1-800-856-3352 for a free consultation.
In a letter to shareholders, the company announced it as a positive development and stated, “An essentially unchanged NAV per share value during what is unquestionably a volatile and dynamic time supports the company’s ongoing belief in its national seniors’ housing portfolio quality.”
The valuation process was supported by Robert A. Stranger & Co. Inc., a third-party valuation firm. They provided a range of values ($6.99 to $7.78 per share), with $7.37 as an approximate midpoint.
CNL is a publicly registered real estate investment trust (REIT) that focuses on housing for seniors and is non-traded. It had raised $1.7 billion in equity participation in its offering that had closed in September 2015. Its portfolio of real estate assets includes interests in 72 properties, 71 of which are senior housing communities apart from one vacant land parcel.
Originally priced at $10 each, the shares were revalued in 2018 from the then $10.01 to $7.99. The contributors to the decline were a $2.00 special distribution and an adjustment of $0.02 that arose from costs associated with the closure of sales of some assets.
Its total real estate assets were valued at $1.847 billion in 2021, a slight decrease from $1.854 billion in 2020. Cash and cash equivalents were valued at $57.7 million in 2021, a decrease from $66 million in 2020. At the same time, the fair market value of the REIT’s debt stood at ($593.4 million), a decrease from ($604.4 million) the previous year.
In a statement, CNL stated, “The economic effects of the COVID-19 pandemic continue to be palpable and widespread, negatively impacting many industries, and certainly including the seniors housing segment. As the company enters year three of the pandemic, it has gleaned measurable insight into its properties’ operational performance under highly strained and variable conditions, which has helped quell some of the uncertainty that existed earlier in the pandemic.”
The REIT said that “Although property cash flows continued to recede over 2021 due primarily to the Delta and Omicron waves, occupancy within the company’s portfolio improved meaningfully over the year. Increases in asking rents and normalizing expenses in the near-to-midterm are expected to lift future property cash flows, resulting in forward-looking improved property projections in the 2021 valuation exercise. That said, there remains uncertainty about the pandemic’s continued effects on operating costs, labor challenges, and other trends, particularly regarding new variants of COVID-19.”
The REIT had initiated the exploration of strategic alternatives in a bid to provide liquidity to its shareholders in 2017. In 2018, a plan to sell the company’s medical office and healthcare portfolio had been committed by the board. Owing to ‘pandemic-related market disruptions’ the company claims that it was forced to shift the focus away from its intended pursuit of strategic initiatives. The situation notwithstanding, it says it has been “actively studying and pursuing select market opportunities and potential liquidity outcomes that are judged to be in [its] shareholders’ best interests.”