Carter Validus Mission Critical REIT II Inc., a publicly registered non-traded real estate investment trust, has agreed to internalize management by purchasing all of the assets from its sponsor and advisor.
In addition, the company plans to change its name to Sila Realty Trust Inc. immediately following the closing of the transaction, which is expected on September 30, 2020.
Total consideration will be paid in cash and consists of approximately $40 million paid over an approximately two-year period, with $25 million to be paid at closing, $7.5 million to be paid on March 31, 2021, and $7.5 million to be paid on March 31, 2022.
The REIT expects its general and administrative expenses to decrease by approximately $18 million on an annualized basis starting in 2021 primarily because it will no longer pay any acquisition, asset management, construction management, property management or disposition fees to affiliates of the sponsor, Carter Validus REIT Management Company II LLC.
The company entered into employment agreements with its current key executive officers that will be effective upon closing.
According to a filing with the Securities and Exchange Commission, John Carter resigned as the chairman of the board and was replaced by Jonathan Kuchin, who has served as an independent director and the chairman of the board’s audit committee since April 2014. Once the transaction closes, Carter will resign as a director.
The REIT claims that it will be organized in a way that is preferable to equity analysts and institutional investors should the board decide to list the company’s securities on a national securities exchange in the future.
“We are excited to embark on this latest evolution of our company, a natural progression from our merger last year with Carter Validus Mission Critical REIT Inc., which we believe strengthens our corporate governance by eliminating many perceived conflicts of interest and better aligning the interests of management with those of our stockholders,” said Michael Seton, chief executive officer and president.
“Furthermore, we expect that the internalization transaction will provide substantial cost savings to the company over time, better situating the company to explore potential liquidity options in the future,” he added.
Carter Validus Mission Critical REIT II completed its merger with affiliated REIT, Carter Validus Mission Critical REIT, in October 2019.
Carter Validus Mission Critical REIT II invests in data centers and healthcare facilities, and as of March 31, 2020, the company owned a portfolio of 153 real estate properties, consisting of 29 data centers and 124 healthcare properties, purchased for approximately $3.1 billion. The company raised approximately $1.2 billion in investor equity after launching its initial primary offering in May 2014, and its follow-on offering closed in November 2018 and raised $129.3 million.