MacKenzie Realty Capital Inc., a non-traded business development company, has launched a tender offer to purchase up to 1 million shares of common stock of Griffin Capital Essential Asset REIT at a price of $7.09 each. MacKenzie had previously acquired 461,542 shares of the REIT via two prior tender offers.
On Oct. 24, 2018, the board of the REIT approved an estimated value per share of the company’s common stock at $10.05, approximately 30 percent greater than the price offered by MacKenzie.
In a letter to shareholders, the REIT’s board recommended that they reject the MacKenzie tender offer, calling it “an opportunistic attempt by MacKenzie to generate profit at stockholders’ expense by purchasing the shares at a deeply discounted price relative to their current estimated value, thereby depriving the stockholders who tender shares in the MacKenzie offer of the potential opportunity to realize the full long-term value of their investment in the company.”
The board’s letter to shareholders also acknowledged that the REIT had reached the annual share limit under the share redemption program for 2018 and that the company “expects to issue its own tender offer at the net asset value of the shares…,” continue to consider additional liquidity options and to offer future additional liquidity through the share redemption program and “other issuer tender offers or other methods, though we can make no assurances as to whether that will happen, or the timing or terms of any such liquidity.”
Griffin Capital Essential Asset REIT oversees a portfolio of 76 office and industrial properties purchased for a total of $3.2 billion, as of Sept. 30, 2018. On Dec. 20, 2018, the REIT announced that it had entered into a definitive agreement to merge with Griffin Capital Essential Asset REIT II in an all-stock transaction that would create a $4.75 billion self-managed REIT. The merger is expected to be completed during the first half of 2019, subject to the approval of shareholders and other closing conditions.