All of the reasons noted likely contributed, but we would consider debt and higher rates as likely the biggest influences. The sector hasn't exactly been a big winner, but NWH has certainly underperformed. There really has been no growth. Forecasted per-share cash flow (2024) is lower than the level of 2010 and many years since. With the payout ratio very high, investors need to see growth to get more comfortable with the distribution. The restructuring should help valuation, by reducing risk. But it may not boost growth significantly (other than interest savings helping overall cash flow). Expenses could come down, but much of the increase has been beyond the company's control. While not the same as commercial office, sentiment towards any business related real estate is pretty low. But with occupancy at 97% it should not be grouped with 'office real estate' certainly where vacancy rates are 20%+. Lower debt and a better payout ratio, combined with lower rates, would likely see valuation go from 10X cash flow to maybe 12X. But this is not going to happen instantly, may not happen at all, or some other problem could still occur.
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