AR Global’s Healthcare Trust REIT Enters Agreement to Internalize Management in Anticipation of Listing
En route to a potential future listing of its common stock on a national securities exchange, Healthcare Trust Inc. – a non-traded real estate investment trust sponsored by Nicholas Schorsch’s AR Global – entered into a definitive agreement to internalize management.
The agreement is with its external advisor, Healthcare Trust Advisors LLC, the indirect parent company of its external advisor, AR Global Investments LLC, and its external property manager, Healthcare Trust Properties LLC. The REIT, also known as HTI, intends to transition to self-management and internalize management functions currently performed by the advisor and property manager. It expects the internalization to close on or about Sept. 27, 2024, subject to customary conditions to closing.
Upon completion of the internalization, the REIT will pay AR Global, either directly or via one of its subsidiaries, $98,244,000 in consideration for the outstanding held interests in the external advisor, an asset management fee of $10,916,000, and a property management fee totaling $3,920,000.
According to previous reporting by The DI Wire, HTI may seek a public listing as early as 2025, depending on market conditions. Also previously reported, the REIT intends to change its name to National Healthcare Properties Inc. in connection with the internalization.
“The HTI management team is very excited about transitioning HTI to an internally managed company. We believe an internally managed structure best positions the company to execute its strategy and maximize value for its stockholders,” said Michael Anderson, chief executive officer of HTI. “This transaction is yet another exciting milestone for the company and we believe it is a critical step towards growing shareholder value and achieving a public listing for HTI’s common stock.”
HTI noted that there can be no assurance that the internalization will close within the anticipated timeframe or at all, or that HTI will be able to list its shares of common stock on a national securities exchange.
On March 27, the board approved and the REIT published a new estimated per-share net asset value of $13 as of Dec. 31, 2023. This was a 7.1% decrease year-over-year of its previous $14 NAV as of Dec. 31, 2022. Previous NAVs per share were $15.00 as of Dec. 31, 2021, $14.50 as of Dec. 31, 2020, $15.75 per share as of Dec. 31, 2019, and $17.50 per share as of Dec. 31, 2018. Shares were originally priced at $25.00 each.
From March 2018, until June 2020, HTI paid monthly distributions to stockholders at a rate equivalent to $0.85 per annum per share of common stock. On Aug. 13, 2020, the board changed the common stock distribution policy. Under the revised policy, distributions authorized by the board were issued on a quarterly basis in arrears in shares of the company’s common stock valued at the NAV of common stock on the applicable date. On Jan. 3, 2024, the dividend rate was $0.015179. The REIT did not declare a quarterly stock dividend in April 2024.
On Friday, Healthcare Trust filed its second quarter 2024 financials, reporting a net loss attributable to common stockholders of approximately $139 million during the first six months of the year, a sizeable increase over the net loss of approximately $38.3 million during the same period of 2023. The company reported funds from operations of negative $95.6 million during the first six months of 2024, compared with positive FFO of $1.3 million during the first six months of 2023. The company’s adjusted FFO during the first half of 2024 equaled $5.8 million, compared with $8.4 million during the same period in 2023. The dramatic year-over-year in the reported financials is largely attributable to the $98.2 million in termination fees it will pay to AR Global and its affiliates in regards to the internalization of management.
The REIT acquires, owns, and manages a diversified portfolio of healthcare-related real estate, focused on medical office and other healthcare-related buildings, and senior housing operating properties. As of June 30, 2024, the company owned 207 properties located in 32 states and comprised of 9.0 million rentable square feet. Its gross asset value was approximately $2.6 billion.
