National Healthcare Properties, Inc. (NHP) stock intrinsic value fair value estimate & owner earnings analysis

National Healthcare Properties (formerly Healthcare Trust, Inc.) owns two kinds of healthcare real estate: outpatient medical facilities leased to physician groups and health systems, and senior housing communities run under a operating-partner structure (reported as SHOP). Revenue was $342.3 million in 2025 (2024: $353.8 million), and the company has been selling properties: 30 outpatient medical buildings and nine senior housing properties were sold across 2024 and 2025. It also ended its outside-manager arrangement (an internalization) in 2024, paying the former advisor a $106.7 million termination fee, of which $75 million was paid in cash in 2024 and $30.3 million in 2025. How we measured earnings. We start from operating cash flow, strip out swings in receivables, payables and prepaid items, and subtract stock compensation and the capital spending needed to keep the buildings competitive ($28.7 million in 2025, none of it treated as growth spending because revenue fell). On that basis the company earned about $12.0 million in 2025. Depreciation ($78 million) and impairments ($44.9 million in 2025) are non-cash and are not charged, but the capital spending needed to maintain the properties is. The 2024 figure was distorted by the one-time termination fee; we set it aside and treat 2025 as the first clean year of the current structure. Earlier years show a long erosion: on our basis owner earnings fell from about $90 million in 2016 to about $1 million in 2023 as properties were sold, capital spending rose and interest costs rose. One further judgement: the company pays roughly $12 to $13 million a year in dividends on two series of perpetual preferred stock. Those payments sit outside operating cash flow, but they rank ahead of common shareholders, so we deduct them when valuing the common shares. A large change in 2026. During the first half of 2026 the company raised about $499 million of new common equity (about $494 million after issue costs). Weighted average diluted shares were about 61.6 million in the second quarter, versus about 28.3 million in 2025. The cash flow statement also shows about $26 million spent repurchasing preferred stock and cash (including restricted cash) up by about $194 million, which implies roughly $190 million of net debt repayment; we could not confirm the purpose of the raise or the period-end share count from the filings we reviewed. We value per share on 61.6 million shares; if the actual count is higher, each case is proportionally lower. Operating cash flow for the first half of 2026 was $30.6 million, against a first-half 2025 result that included the termination-fee payment. Growth check. Owner earnings rose from a normalized loss of about $8.6 million in 2024 to $12.0 million in 2025, but that swing comes from the internalization and is not a growth rate. We assume no growth in the base case, so year one is not above the trailing figure. We credit no growth from acquisitions, rising occupancy or new products in the base case because none has a multi-year record of repeating through a downturn. Base case: $3.20 per share. Earnings before preferred dividends step up from $12.0 million to about $24 million a year, which is 2025 plus roughly $11 million of interest saved by the implied debt repayment at the 5.94% average rate on the revolver and term loan at year-end 2025. First-half 2026 ran at a pace closer to $32 million annualized, which supports the level but is only two quarters and includes the raise's effect for part of that period. After about $12.2 million of preferred dividends (the first-half 2026 pace), about $11.8 million a year is left for common shareholders, held flat and valued as a lasting stream of maintained real estate. We leave out any return on the roughly $194 million of added cash, because how it will be invested is not yet shown. Bull case: $6.75 per share. Owner earnings before preferred dividends stay at the first-half 2026 pace of about $32 million, leaving about $20 million for common, and grow 3% a year for ten years. The named drivers are the senior housing segment, which management credits for higher 2025 cash flow, and the acquisition activity already under way (first-half 2026 investing outflow of $108.8 million). Growth then stops. Bear case: $0.10 per share. Owner earnings before preferred dividends reach only about $16 million and then erode 5% a year, continuing the 2016-2023 pattern of declining earnings as the outpatient portfolio is sold down and capital needs rise. Because preferred dividends are fixed, the common share of earnings disappears in about five years. Debt is the reason the downside is steep: total borrowings were $1.05 billion at year-end 2025, including $334.7 million of Fannie Mae debt due in 2026 and $422.7 million due in 2028, and the company reported $44.9 million of impairments in 2025 and $24.9 million in 2024. The company does not appear to owe more than it is worth in this case, but common shareholders are left with almost nothing. What could make this wrong. The main uncertainty is the period-end share count and what the 2026 capital was used for. If the money was used for debt reduction or acquisitions that earn more than assumed, the base case is too low; if the shares issued are well above 61.6 million, or capital spending keeps rising (from $21.9 million in 2024 to $28.7 million in 2025), it is too high. We could not reconcile the second-quarter 2026 share count and use of proceeds from the filings on hand. The margin-of-safety price of $1.40 sits well below the base value because leverage is heavy, the earnings history is downward, the new capital structure is unproven, and preferred holders come first.