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Hospitality Investors Trust Commences Defensive Tender Offer

Hospitality Investors Trust, a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, commenced a tender offer for up to 1 million shares of its common stock at a price of $6.50 per share to deter non-traded business development company MacKenzie Realty Capital from purchasing shares of the REIT.

On Monday, MacKenzie notified Hospitality Investors Trust that it had commenced an unsolicited tender offer to purchase up to 300,000 shares of common stock for $5.53 each. The MacKenzie tender offer expires on December 8th, while Hospitality Investors Trust’s tender offer expires on December 11th.

The Hospitality Investors Trust board believes that both the MacKenzie offer price of $5.53 per share, and the company’s offer price of $6.50 per share are “well below the current and potential long-term value of the shares.” The board and the REIT “strongly recommend” that stockholders not tender their shares in either offer.

The board approved an estimated net asset value per share of $13.20 in June 2017. The purchase price in the MacKenzie offer is 58.1 percent lower than the estimated per share NAV, while the purchase price in the REIT’s offer is 50.8 percent lower. Shares of the REIT were originally sold for $25.00 each.

Hospitality Investors Trust said that it is commencing its own tender offer “to deter MacKenzie and other potential future bidders that may try to exploit the illiquidity of the shares and acquire them from stockholders at prices substantially below their fair value and to provide stockholders who desire immediate liquidity an alternative to the MacKenzie offer.”

Hospitality Investors Trust focuses on acquiring institutional quality select-service lodging properties in North America branded by premium national hotel brands. The REIT’s offering went effective in January 2014 and suspended sales activities in November 2015 after raising $903 million in investor equity, according to Summit Investment Research. As of the second quarter of 2017, the company’s $2.5 billion portfolio was comprised of 148 properties. The company severed ties with its external advisor, an affiliate of AR Global, and became self-managed on March 31, 2017.

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