ARC Healthcare Trust III Plans to Sell Portfolio to Affiliated REIT for $120 Million
American Realty Capital Healthcare Trust III, a publicly registered non-traded real estate investment trust sponsored by AR Global, has announced plans to sell substantially all of its assets to affiliated non-traded REIT Healthcare Trust Inc. for $120 million, subject to stockholder approval.
The board approved the proposed purchase by HTI, and subsequently approved a plan of liquidation and dissolution of the company. Stockholders must approve both proposals for either to become effective.
The company filed preliminary proxy materials for its yet-to-be scheduled annual meeting of stockholders where shareholders vote on both proposals.
ARC Healthcare Trust III estimates that stockholders will receive $17.67 to $17.81 per share of common stock. The REIT anticipates paying periodic liquidating distributions, including an initial liquidating distribution of $15.75 per share that is expected to be paid within two weeks of closing the asset sale. Shares were originally sold for $25.00 each.
The $120 million purchase price is subject to customary prorations and closing adjustments in accordance with the terms of the purchase agreement, which are estimated to be $0.8 million payable to HTI, assuming the sale closes on November 30, 2017.
The $0.8 million will be payable on the date the sale is consummated less $4.9 million, the principal amount of a loan secured by the company’s Philip Center property, which will be assumed by HTI or repaid by ARC Healthcare Trust III.
ARC Healthcare Trust III is obligated to indemnify HTI in certain circumstances, including any stockholder litigation brought by ARC Healthcare Trust III stockholders in connection with the purchase.Â
HTI plans to deposit $6 million of the purchase price on the closing date into an escrow account for the benefit of ARC Healthcare Trust III, less any amounts paid or reserved for indemnification claims of HTI, will be released in installments over a period of 14 months.
As previously reported by The DI Wire, ARC Healthcare Trust III suspended its distribution reinvestment plan in May, nearly one year after disclosing a potential strategic transaction with a then-unnamed affiliate.
American Realty Capital Healthcare Trust III raised $168 million prior to the cancellation of its offering following a series of ARC-related scandals and currently owns a portfolio of 19 properties purchased for a total of $128.3 million.
Healthcare Trust, formerly American Realty Capital Healthcare Trust II, owns an 8.4 million-square-foot portfolio of 163 properties with a total purchase price of $2.3 billion, according to Summit Investment Research. The company’s primary offering went effective in February 2013 and closed in November 2014 after raising $2.2 billion in investor equity.
