8-K: Strategic Student & Senior Housing Trust Sets Net Asset Value at $6.35 Per Share

Strategic Student & Senior Housing Trust has established an estimated net asset value of $6.35 per share for its Class A, T, W, Y, and Z shares as of September 30, 2024.

Summary

• Strategic Student & Senior Housing Trust, Inc. has announced an estimated net asset value (NAV) of $6.35 per share for its Class A, Class T, Class W, Class Y, and Class Z shares.
• This valuation is based on the estimated value of the company's assets minus its liabilities, divided by the number of shares outstanding on an adjusted fully diluted basis as of September 30, 2024.
• The NAV was determined by the board of directors, following a recommendation from the Nominating and Corporate Governance Committee.
• Kroll, LLC, an independent third-party real estate valuation firm, provided valuation services for the company's assets and liabilities.
• The company's senior housing properties were valued at $203.1 million, while student housing properties were valued at $63 million as of September 30, 2024.
• The total market value of real estate assets was $203.1 million, down from $262.9 million in the previous year due to the sale of student housing properties.
• The company's total assets were valued at $221.4 million, and total liabilities were $138.2 million, resulting in a net asset value of $83.3 million.
• The NAV per share for all share classes increased slightly from $6.34 in the previous year to $6.35.
• The valuation was performed in accordance with the Institute for Portfolio Alternatives (IPA) guidelines.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as the company has increased its NAV per share, and the valuation process appears to be thorough and in line with industry standards. However, there are some risks and uncertainties associated with future valuations.

Positives

• The company's net asset value per share increased slightly from the previous year.
• The appraised value of the senior housing properties increased by approximately 12.5% over their aggregate purchase and development price.
• An independent third-party valuation firm, Kroll, LLC, was engaged to provide valuation services.
• The valuation process was overseen by the Nominating and Corporate Governance Committee, comprised of independent directors.

Negatives

• The total market value of real estate assets decreased from $262.9 million to $203.1 million due to the sale of student housing properties.
• The document notes that future valuations could be affected by weakened economic conditions.
• The estimated NAV is not audited and does not represent fair value according to GAAP or liquidation value.

Risks

• Future valuations of the company's properties could be affected by weakened economic conditions.
• The estimated NAV is based on a number of estimates and assumptions that may not be accurate or complete.
• The estimated asset values may not represent current market value or book value.
• The estimated value of the properties does not necessarily represent the value the company would receive if the assets were marketed for sale.
• The company cannot guarantee that a stockholder would be able to resell their shares at the estimated NAV.
• The company cannot guarantee that the methodology used to estimate the NAV will be in compliance with any future FINRA rules or ERISA reporting requirements.

Future Outlook

The company anticipates publishing a new estimated share value on an annual basis, and future valuations could be affected by economic conditions.

Management Comments

• The Committee concluded that the range in estimated value per share of $5.66 to $7.10, with an approximate mid-range value of $6.35, as indicated in the valuation report provided by Kroll was reasonable.
• The Board unanimously agreed upon the Estimated Per Share NAV of $6.35 recommended by the Committee, which determination is ultimately and solely the responsibility of the Board.

Industry Context

This announcement is typical for non-listed REITs, which are required to provide periodic updates on their net asset value to assist broker-dealers and fiduciaries. The valuation process and methodology used are in line with industry standards.

Comparison to Industry Standards

• The company's valuation process aligns with the IPA Guidelines, which are a standard for non-listed REITs.
• The use of an independent third-party valuation firm like Kroll is a common practice in the industry.
• The discounted cash flow method used for valuing the senior housing properties is a standard approach for income-producing real estate assets.
• The company's disclosure of key assumptions, such as capitalization rates and discount rates, is consistent with industry best practices.
• Other non-listed REITs, such as those managed by Blackstone or Starwood, also provide periodic NAV updates using similar valuation methodologies.

Stakeholder Impact

• Shareholders will receive an updated valuation of their shares.
• Broker-dealers will use the NAV to comply with FINRA rules.
• Fiduciaries will use the NAV to comply with ERISA reporting requirements.

Next Steps

• The company anticipates publishing a new estimated share value on an annual basis.

Key Dates

Keywords

Net Asset Value, NAV, Real Estate, Senior Housing, Valuation, Kroll, Appraisal, IPA Guidelines, Discounted Cash Flow, Property Valuation