Carter Validus Mission Critical REIT II Urges Shareholders to Reject Comrit Tender Offer, Provides COVID-Related Rent Update
The board of Carter Validus Mission Critical REIT II Inc., a publicly registered non-traded real estate investment trust, is urging shareholder to reject an unsolicited tender offer made by Comrit Investments 1, Limited Partnership.
The board of Carter Validus Mission Critical REIT II Inc., a publicly registered non-traded real estate investment trust, is urging shareholders to reject an unsolicited tender offer made by Comrit Investments 1 LP.
Comrit is offering to purchase up to 798,669 Class A shares and 199,667 Class T shares for $6.01 per share. No offer is being made for the REIT’s Class T2 or Class I shares. The offer expires on June 30, 2020.
The REIT’s most recent net asset value per share is $8.65, as of October 31, 2019, nearly 44 percent higher than the $6.01 per share Comrit offer price.
In a letter to REIT shareholders, the board said that it believes Comrit’s tender offer represents “an opportunistic attempt to purchase shares at a low share price and make a profit…”
In late April, Carter Validus Mission Critical REIT II partially suspended its share repurchase program, except for the death of a shareholder, citing the uncertainty surrounding the coronavirus (COVID-19) pandemic. The company also reached its 1.25 percent share repurchase limit for the second quarter of 2020 and will not be able to fully process all repurchase requests.
“…The outbreak of COVID-19, together with the resulting restrictions on travel and quarantines imposed, has had a negative impact on the economy and business activity globally,” stated Carter Validus Mission Critical REIT II in the letter. “The extent to which our business may be affected by COVID-19 will largely depend on future developments with respect to the continued spread and treatment of the virus, which we cannot accurately predict.”
Comrit and its affiliates currently own approximately 269,800 Class A shares, 1.2 million Class T shares and 272,331 Class T2 shares of Carter Validus Mission Critical REIT II, or approximately 0.2 percent of the outstanding Class A shares, 3 percent of the Class T shares, and 7.9 percent of the Class T2 shares.
In other company news, Carter Validus Mission Critical REIT II issued a COVID-19 related update to its investors, indicating that since the onset of the pandemic, it has received tenant requests for rent deferment and abatement.
“In the vast majority of cases in which we allowed tenants to defer rent, repayment of such deferred amounts is due within six to 12 months,” the company said in a letter to shareholders. “For a limited number of requests, we provided an abatement of rent in conjunction with a multi-year lease extension, in which cases we anticipate such extensions adding value to the corresponding property and overall company portfolio.”
For the months of April and May, the REIT said that it collected approximately 97 percent and 94 percent of contractual rent, respectively. However, when deferred rents and other tenant accommodations are excluded, collections are 99 percent in April and 98 percent in May.
The REIT noted that the total amount of deferment and abatement granted to tenants is equal to approximately 1.75 percent of the total annual contractual revenue in 2020, which it does not anticipate being material to its near-term liquidity or ability to cover current monthly distributions.
Carter Validus Mission Critical REIT II invests in data centers and healthcare facilities, and as of December 31, 2019, the company owned a $3.2 billion portfolio of 153 real estate properties. 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.
