NorthStar Healthcare Income, Inc. (“NorthStar Healthcare”) a public, non-traded REIT, has lowered its estimates net asset value or “NAV” to $6.25 a share. Shares were originally sold for $10.00 a share. NorthStar Healthcare had last reported a $7.10 NAV per share, as of June 30, 2018. More recently, Robert A. Stanger & Co. Inc., developed the $6.25 a share valuation, which is based on the estimated value of NorthStar Healthcare’s assets, less the estimated value of its liabilities, divided by the number of shares outstanding as of June 30, 2019. Stanger reportedly relied upon appraisals for 75 properties with an estimated value of $1.99 billion in estimating the new NAV.
Although investors may be disappointed at the low $6.25 a share NAV, this net asset value or NAV may not even reflect the actual value that shareholders would realize if NorthStar Healthcare were liquidated, listed on an exchange or merged with a public company. Financial analysts frequently assume that non-traded investments such as NorthStar Healthcare will trade at a discount to NAV if listed on a securities exchange. In a prominent example of this phenomenon, a large non-traded REIT known as American Finance Trust or AFIN listed its shares in 2018 had published an estimated NAV of $23.56 a share, yet shares later traded for as little as $10.08 after AFIN was listed on the Nasdaq Global Select Market. AFIN shares now trade at $14.56 a share as of the close of the market on December 4, 2019.
Recently, shares of NorthStar Healthcare were reportedly trading on a secondary platform at prices as low as $2.45 a share- down from over $5.00 a share a year ago and a far cry from even the new, lowered $6.25 NAV.