Griffin-American Healthcare REIT III Inc., a publicly registered non-traded real estate investment trust co-sponsored by American Healthcare Investors and Griffin Capital Company, is recommending that investors reject an unsolicited tender offer from Comrit Investments 1, Limited Partnership.
Comrit is offering to purchase up to 554,529 shares of the REIT’s common stock for $5.41 each, which is 42 percent lower than the most recent estimated net asset value of $9.40 per share as of June 30, 2019. The REIT anticipates publishing a new NAV by March 31, 2021, which will take into account the impact of the COVID-19 pandemic on the value of its assets.
“The board believes that the Comrit offer represents an opportunistic attempt by Comrit to purchase the shares at a low share price and make a profit and, as a result, deprive any company stockholders who tender their shares of the company’s common stock of the potential opportunity to realize the long-term value of their investment in the company,” Griffin-American Healthcare REIT III stated in a letter to shareholders.
The board also believes Comrit is making the offer to capitalize on the market disruption and fears caused by the coronavirus pandemic, the REIT said.
In the early days of the pandemic, Griffin-American Healthcare REIT III enacted a number of steps to preserve capital including eliminating all “unnecessary” expenditures, reducing its distribution rate from $0.60 per share to $0.30 per share (annualized) beginning with the April 2020 distribution, and placing limitations on its share repurchase plan.
The REIT later suspended monthly distributions to shareholders after paying the May 2020 distribution on June 1, 2020. The company also suspended its distribution reinvestment plan and share repurchase plan, citing the effects of the COVID-19 pandemic on the healthcare sector and its portfolio. In addition, the REIT’s advisor deferred half the asset management fee for six months beginning in June 2020.
Griffin-American Healthcare REIT III launched its initial public offering in February 2014 and closed in March 2015 after raising more than $1.9 billion. As of September 30, 2019, the REIT owned a portfolio of 97 properties (101 buildings) and 118 integrated senior health campuses purchased for roughly $3 billion. In addition, the REIT had invested $60.4 million in real estate-related investments.