StratCap Digital REIT NAV Slips 2.2% as Second Data Center Executive Departs
StratCap Digital Infrastructure REIT Inc.’s net asset value fell 2.2% in the third quarter, and the nontraded real estate investment trust has lost both of the executives who led data center investing for its adviser and sponsor in the span of two months.
The REIT’s board on Oct. 21 approved a total NAV of $109.7 million as of Sept. 30, down from $112.2 million as of June 30. NAV per Class I share fell to $9.4278 from $9.6357, and the weighted average across all share classes and operating partnership units fell to $9.4279 from $9.6346.
Separately, the company disclosed that Chris Flynn resigned Sept. 30 as chief investment officer for data centers at the REIT’s external adviser, StratCap Digital Infrastructure Advisors II LLC, and its sponsor, StratCap Investment Management LLC. He also left the sponsor’s investment committee. The company said his departure was not the result of any disagreement.
Flynn has entered into a consulting agreement with StratCap LLC, an affiliate of the adviser and sponsor, to provide “transaction-related advisory services with respect to specified assets” from Oct. 1 through June 30, 2027, unless it is terminated earlier, according to the company.
Flynn’s exit follows the July 31 resignation of Bryan B. Marsh III as head of data center investments for the adviser and sponsor, which AltsWire reported in August alongside the resignation of James A. Condon, former chairman and president. At the time, Erik Rostvold, chief risk officer of the adviser and sponsor, told AltsWire that Flynn remained in his role. The company has not named a successor to either executive.
What Moved NAV
The adviser’s key valuation assumptions were unchanged from June 30. Weighted-average discount and exit capitalization rates held at 6.6% and 4.24% for cell towers and at 7.25% and 6.25% for data centers, according to the company.
About $1.1 million of the $2.5 million decline came from a drop in unamortized expense support and organization and offering costs, which the REIT adds back to NAV. That balance fell to $11.9 million from $13 million. The value of the REIT’s 51% stake in its DataCom joint venture, which holds about 150 towers, fell about $737,000 to $49.6 million. The REIT’s directly owned real estate, two data centers, rose slightly to $38.2 million.
The Sept. 30 NAV breakdown no longer lists the $18.1 million loan payable that appeared as of June 30, and cash fell to $9.2 million from $27.6 million.
The board ended its strategic alternatives review in September without a sale. In a Sept. 23 letter, the company told stockholders it would continue to weigh potential asset sales; steps to manage its liabilities, capital structure, and liquidity; and possible special distributions in connection with any completed transaction. The board has not decided to pursue any of them, the company said.
Distributions have been suspended and the share repurchase program partly suspended since the board launched the review in April. The NAV update does not address either.
Stockholders will vote at the REIT’s Nov. 13 annual meeting on the election of eight directors and the ratification of Deloitte & Touche LLP as auditor. The sponsor, a subsidiary of Australia-based HMC Capital, owns about 15.6% of the REIT’s common stock.
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