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Non-Traded REIT Sells Portfolio of Properties for $790 Million

CNL Lifestyle Properties, a non-traded REIT sponsored by CNL Financial Group, has had an eventful week. The company, which invests in income-producing properties with a focus on lifestyle-related industries, made an agreement to sell its portfolio of senior housing assets and was also the target of a mini-tender offer by CMG Partners, LLC (CMG).

On December 22, 2014, the company entered into a definitive agreement to sell its entire senior housing portfolio to Senior Housing Properties Trust for $790 million. The portfolio is 38 properties strong, all of which were purchased since January 2011.

In March of this year, CNL Lifestyle Properties engaged Jeffries LLC, a global investment and advisory firm, to assist in planning a liquidity event for the REIT. This portfolio sale takes it another step in that direction.

The projected net cash to the company from the sale of its senior housing portfolio is expected to be about $486 million after repayment or assumption of approximately $286 million of debt. A portion of the proceeds may be used to retire debt, make a special distribution to stockholders, and/or make strategic capital expenditures to enhance some of the REITs remaining properties.

On December 23, 2014, CNL Lifestyle Properties issued a letter to shareholders regarding a mini-tender offer by CMG to purchase a maximum of 2,000,000 shares of CNL Lifestyle Properties at a price of $4.25 per share in cash. According to the letter, this purchase price is around 38% less than the REIT’s last estimated net asset value per share of $6.85 as of December 31, 2013.

The letter advises shareholders to be cautious about the min-tender offer but also states that, “because trading on the secondary market is limited, if you need immediate liquidity, accepting a mini-tender offer may be your quickest way of achieving liquidity.”

According to data from Central Trade and Transfer, a secondary market provider for shares of non-traded REITs and other limited partnerships, CNL Lifestyle traded at a low of $5.30 and a high of $5.81 during the month of November.