First Capital Real Estate Trust Incorporated, a publicly registered non-traded REIT, are in talks with Presidential Realty Corporation (OTC:PDNLA/PDNLB) regarding a potential strategic transaction. Presidential Realty, a real estate investment trust which trades over the counter, currently owns one property in Massachusetts.
If approved, the transaction would result in Presidential acquiring substantially all of First Capital Real Estate Trust’s assets in exchange for newly issued Presidential shares.
“This transaction further advances our liquidity plan for the shareholders of FCRETI. This plan was outlined in our strategic partnership with Forum Partners earlier this year, said Suneet Singal, chief executive officer of First Capital. “It is our goal to effectuate FCRETI’s liquidity plan through this transaction and other events in the near future.”
The proposal, which is still subject to due diligence investigations, must be approved by the boards of both companies, as well as FCRETI shareholders.
The two companies executed a letter of intent relating to the proposed transaction and entered into an exclusivity agreement which expires September 18, 2016.
On Friday, the board of First Capital Real Estate Trust approved an estimated net asset value of $16.03 per share. The estimate was calculated by the REIT’s advisor, First Capital Real Estate Advisors, and based in part on property appraisals performed by multiple third party valuation firms.
First Capital Real Estate Trust was founded by New York real estate developer Jacob Frydman, but was purchased by First Capital Real Estate Investments in late 2015, as reported by The DI Wire.
As part of that deal, First Capital contributed real estate assets, interests, and contract rights with an overall net equity value of $41.8 million in exchange for the issuance of 3.3 million units in United Realty Capital Operating Partnership L.P. at a price of $12.49 per unit, and the assumption of $106.4 million in debt related to the assets.
First Capital also purchased the advisor and property manager interests, together with 500,000 issued and outstanding shares of preferred stock and 18,182 shares of common stock for $25 million in cash and other considerations.
First Capital Real Estate Trust’s portfolio consists of 31 assets including land development, luxury resorts, multifamily, gas stations, hotels, medical offices, transitional housing, retail, and business offices. The REIT went effective in August 2012 and raised $56.1 million before closing the offering in April.