Carter Validus Mission Critical REIT Inc. (CVMC REIT I) and Carter Validus Mission Critical REIT II Inc. (CVMC REIT II), both publicly registered, non-traded real estate investment trusts, have entered into a definitive agreement to merge in a stock and cash transaction, creating an entity valued at approximately $3.2 billion. The transaction is expected to close in the second half of 2019, with the approval of CVMC REIT I stockholders.
The combined company will retain the name Carter Validus Mission Critical REIT II Inc. and will own 146 healthcare and data center properties in 33 states, totaling approximately 8.4 million square feet of space.
Under the terms of the agreement, CVMC REIT I stockholders will receive $1.00 per share in cash and 0.4681 shares of CVMC REIT II Class A common stock for each share of CVMC REIT I common stock owned.
Upon completion of the merger, current CVMC REIT I stockholders will own approximately 39 percent and current CVMC REIT II stockholders will own approximately 61 percent of the combined company, on a fully diluted basis.
“We are excited to announce the merger of CVMC REIT I and CVMC REIT II and believe that joining together the two complimentary portfolios creates significant advantages for stockholders of both companies,” said Michael Seton, CEO and president of the REITs.
He added, “We expect that the combined company will benefit from increased size and scale, further diversification of tenancy and geography, and the continued guidance of its seasoned management team, culminating in expanded potential liquidity options and resulting value to stockholders.”
The agreement includes a “go-shop” provision, and CVMC REIT I will actively solicit competing acquisition proposals through May 26, 2019.
Carter Validus Mission Critical REIT owns a $1.2 billion portfolio comprised of 61 healthcare properties, as of March 2019. The company’s offering was declared effective by the SEC in December 2010 and closed in June 2014 after raising more than $1.7 billion in investor equity, according to Summit Investment Research.
Carter Validus Mission Critical REIT declared an estimated net asset value of $5.33 per share, as of June 30, 2018. The company’s previously declared NAV per share was $9.26, which was later updated to $6.26 per share in connection with a $3.00 per share special cash distribution paid on March 16, 2018. Shares were originally sold for $10.00 each.
Carter Validus Mission Critical REIT II invests in net leased data center and healthcare assets and raised approximately $1.2 billion in investor equity after launching its initial primary offering in May 2014. The company’s follow-on offering, which closed in November 2018, raised $86.9 million as of July 23, 2018.
The REIT’s $1.9 billion portfolio was comprised of 85 properties as of March 2019. Shares had an estimated net asset value of $9.25 as of June 30, 2018 and were originally sold for $10.00 each.