CNL Healthcare Properties Inc., a publicly registered non-traded real estate investment trust focused on senior housing, has recommended that shareholders reject the recent unsolicited tender offer made by Comrit Investments 1 LP, a Tel Aviv-based investment fund. Comrit is seeking to purchase up to 8.8 million shares for $3.66 per share. The offer expires on March 30, 2021.
CNL Healthcare’s most recent net asset value per share was $7.81, as of December 31, 2019, and it plans to announce its next annual valuation on March 11, 2021.
In 2017, the REIT began evaluating and exploring strategic alternatives to provide liquidity to stockholders. The following year, the board committed to a plan to sell the company’s medical office and healthcare portfolio, comprised of 63 properties (53 medical office buildings, five post-acute care facilities and five acute care hospitals across the United States.
“The board believes that the Comrit offer is intended to capitalize on the lack of liquidity for shares of the company’s common stock and market-driven fears resulting from the COVID-19 pandemic by seeking to purchase stockholders’ shares at a price significantly below their fair value in order for the offeror to make a significant profit,” CNL Healthcare said in a letter to shareholders.
The REIT indicated that it “has maintained its focus on a strong balance sheet, liquidity, and financial flexibility” throughout the pandemic, and has paid all of its quarterly distributions throughout 2020 in an unchanged amount from pre-pandemic levels. In the third and fourth quarters of 2020, the REIT repaid $80 million outstanding under its corporate revolving credit facility and an $8 million maturing loan. Its next loan matures in 2022.
As of February 15, CNL Healthcare had approximately $194.9 million in cash, cash equivalents, and available capacity under its corporate line of credit. This equates to almost 2.9 times the annual corporate operating expenses and debt service obligations based on annualized 2020 third-quarter results.
Comrit and its affiliates currently own close to 450,000 shares of CNL Healthcare common stock, or approximately 0.3 percent of the outstanding shares. The latest offer constitutes approximately 5.1 percent of the outstanding shares, and if all shares sought by Comrit are tendered, it would pay roughly $32.2 million.
CNL Healthcare Properties closed its offering in September 2015 after raising more than $1.7 billion in investor equity. The company’s multi-billion-dollar real estate portfolio consisted of interests in 74 properties, including 71 senior housing communities, one vacant land parcel and two acute care hospitals classified as held for sale.