CNL Growth Properties Full-Cycle Results Impressive, But Hardly 80%, as written by DI Wire
October 19, 2017 | James Sprow | Blue Vault
A recent article in the DI Wire was headlined “CNL Growth Completes Liquidation with 80% Total Return to Early Investors.” While it is true that shareholders who invested in CNL Growth Property common shares in Q4 2009 at $10.00 per share will have received a total of approximately $18.21 in distributions as of the Company’s final liquidation on or around October 24, total returns are typically expressed as annualized rates of return, not simply as cash out vs. cash in.
In Blue Vault’s Nontraded REIT Full-Cycle Performance Studies, the calculations of total returns are based upon standard financial definitions of the internal rate of return, an annualized rate that considers the “time value of money” and treats cash flows differently depending upon their timing. Calculating the return for a $10.00 per share investment in late 2009 and a liquidating investment in 2017, taking into account the stock dividends that occurred between Q3 2010 and Q4 2013 that would have resulted in early investors owning 1.40 shares for every initial share purchased by Q4 2014, an internal rate of return for early investors based upon standard financial definitions would be approximately 9.8% annualized.
Blue Vault agrees that early investors would have received approximately $18.21 per share in special and liquidating distributions for the $10.00 per share initial investment, but these cash flows occurred over a time period beginning in Q1 2015 and ending with the final liquidating distribution in Q3 2017. To characterize the “Total Return” as 80% is misleading, in our view, and uses a return calculation methodology that CNL and any other NTR sponsor would likely disavow.
Blue Vault’s Managing Partner, Stacy Chitty stated, “We’re excited for CNL and the investors of CNL Growth REIT. CNL has always been a firm who puts investors first, and their dedication to doing things the right way has paid off. CNL has performed.”
Learn more about CNL Financial Group on the Blue Vault Sponsor Focus page.
The well-attended Blue Vault session at the recent National Planning Holdings National Conference was very well received. The value of their products was evidenced by the volume of questions from the attendees. Stacy Chitty, Managing Partner, did an excellent job of explaining the history, strategy and value of Blue Vault data.