Business Context and Reporting Period
Company: Griffin-American Healthcare REIT IV, Inc. (American Healthcare REIT, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: April 6, 2018
Valuation Date: December 31, 2017
Event: Determination of Estimated Per Share Net Asset Value (NAV) and revision of primary offering prices for Class T and Class I common stock.
Key Financial Metrics
The filing focuses on asset valuation rather than operational income statement metrics. Key valuation figures as of December 31, 2017, include:
- Estimated Per Share NAV: $9.65
- Total Estimated Net Asset Value: $407,099,000
- Appraised Properties Value: $517,909,000 (38 medical office and healthcare-related properties)
- Cash and Other Assets: $12,055,000
- Debt Liabilities: ($95,568,000)
- Other Liabilities: ($27,297,000)
- Fully Diluted Shares Outstanding: 42,207,368
- Initial Investment (Aggregate): Approximately $465,140,000
Material Changes and Pricing Updates
Based on the approved NAV of $9.65, the Board revised the offering prices effective April 11, 2018:
- Class T Common Stock: Revised offering price is $10.05 per share (NAV plus applicable fees).
- Class I Common Stock: Revised offering price is $9.65 per share.
- Share Repurchase Plan (SRP): The repurchase price is now the lesser of the stockholder's cost basis or the new offering price ($10.05 for Class T; $9.65 for Class I).
- Distribution Reinvestment Plan (DRIP): Shares issued under the DRIP will be priced at $9.65 per share commencing with the May 2018 distribution.
Guidance, Methodology, and Risks
Valuation Methodology: The NAV was determined using an independent valuation report by CBRE Capital Advisors, Inc. ("CBRE Cap"). The process involved restricted-use appraisals and unlevered, ten-year discounted cash flow (DCF) analyses for 38 properties. The Board selected the mid-point ($9.65) of the range ($9.32 to $9.99) provided by CBRE Cap.
Key Assumptions:
- Discount Rates: 6.95% - 8.60% depending on property type (Medical Office, Senior Housing, RIDEA).
- Terminal Capitalization Rates: 6.51% - 7.84% depending on property type.
Risks and Limitations:
- The estimated NAV is not audited and does not represent GAAP fair value or liquidation value.
- There is no assurance that shares can be resold at the estimated NAV or that the NAV will be acceptable to FINRA or ERISA.
- The valuation does not reflect a discount for the company being externally managed or potential disposition costs.
- Sensitivity Analysis: A 2.5% change in discount or terminal capitalization rates could alter the per share NAV by approximately $0.16 to $0.17.
Investor Verification Checklist
- Verify the independence and qualifications of CBRE Capital Advisors, Inc. and the specific appraisers used.
- Review the "Risk Factors" section of the Company's 2017 Form 10-K for broader market and operational risks.
- Confirm the specific fee structures (selling commissions and dealer manager fees) included in the $10.05 Class T offering price.
- Assess the impact of the 15.0% Advisor subordinated participation in net sales proceeds on potential liquidation scenarios.
- Monitor future filings for updates to the NAV, as the Company expects to publish an updated NAV on at least an annual basis.