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AR Global’s Healthcare Trust Ends Strategic Review, Kahane Resigns from Board

The board of Healthcare Trust, a publicly registered non-traded REIT sponsored by AR Global – the successor business to AR Capital, announced that its two special committees completed their evaluations relating to the company’s strategic alternatives process.

According to a filing with the Securities and Exchange Commission, the committees recommended that Healthcare Trust continue to execute its business plan and focus on managing and strengthening its assets. The board accepted the committees’ recommendations and terminated the special committees since the review is now complete.

Under the supervision of the special committees, Healthcare Trust said that they conducted a “deliberate and comprehensive” strategic review process that included a broad outreach to potential buyers. The REIT also considered a “wide range” of potential alternatives, including selling the company, selling all or a portion of the assets, and “certain strategic combinations.”

According to industry reports, AR Global was in talks to consolidate a number of its real estate investment trusts, including Healthcare Trust, in a potential roll-up transaction. The consolidation would have resulted in American Finance Trust acquiring Healthcare Trust, Realty Finance Trust, American Realty Capital – Retail Centers of America, and American Realty Capital Healthcare Trust III.

The special committees’ financial advisors, Morgan Stanley and KeyBanc Capital Markets, contacted more than 100 potential buyers, and 40 of those executed nondisclosure agreements and received more detailed financial and operating information about the company.

While the Healthcare Trust said that it received a number of formal and informal indications of interest from third parties, the proposed offer prices were below the low end of its estimated net asset value range of $20.37-$22.27 per share. The company said that none of the expressions of interest were worth pursuing further because it was unlikely that any of the proposals would provide a meaningful premium for shareholders.

The company said that it will focus on managing and strengthening its portfolio, including potentially narrowing the range of properties owned and operated, and continuing to address underperforming assets.

Additionally, William Kahane resigned from the board of directors, which was reportedly not due to any disagreement with the firm. In connection with his resignation, he advised the REIT that he will no longer be responsible for any part of any registration statement filed by the company. To replace Kahane, the board appointed Edward Weil, Jr. to serve as a member of the board. Weil is the chief executive officer of AR Global Investments, the parent of the REIT’s sponsor.

In connection with Weil’s appointment as director, the company entered into an indemnification agreement where the company will indemnify him from all judgments, penalties, and fines that may result from his roles within the company.

Healthcare Trust, which invests in multi-tenant medical office buildings, owns an 8.4 million-square-foot portfolio of 164 properties located in 29 states. The company’s primary offering went effective in February 2013 and closed in November 2014 after raising $2.2 billion in investor equity.

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