Resource Real Estate Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, is urging investors to reject an unsolicited tender offer made by Comrit Investments 1 Limited Partnership, for up to 600,962 shares of the REIT’s common stock. Comrit’s offer price is $8.32 per share.
In March 2019, the REIT’s board approved a $10.83 net asset value per share for the REIT’s common stock as of December 31, 2018.
In a letter to shareholders, the REIT said that it currently provides a liquidity option for its stockholders through a share redemption program at 95 percent of the current NAV per share, or $10.29 per share, which is 24 percent higher than Comrit’s offer price.
Special redemptions, such as those made in connection with a stockholder’s death, qualifying disability or confinement to a long-term care facility, are redeemed at the current $10.83 estimated value per share.
The REIT may not redeem more than 5 percent of the weighted-average number of shares outstanding during the 12-month period immediately prior to the effective date of redemption. In addition, the REIT’s board of directors will determine at least quarterly whether the REIT has sufficient excess cash to repurchase shares.
During the 12-month period up to and including the most recent redemption date, approximately 4.44 percent of the weighted-average number of shares outstanding were submitted for redemption and all redemption requests were honored by the REIT.
“We believe that Comrit’s offer is meant to take advantage of the illiquidity of the REIT’s shares by buying…shares at a price significantly below their fair value in order to make a significant profit,” the letter stated. “The REIT believes that tendering stockholders whose shares are accepted for payment will lose the opportunity to participate in any potential future upside and future growth of the REIT with respect to such shares and will lose the right to receive any future distributions that the REIT may declare and pay.”
The tender offer constitutes approximately 0.85 percent of the REIT’s outstanding common stock.
Resource Real Estate Opportunity REIT launched its initial offering in June 2010 and raised more than $633 million in investor equity before its closing in December 2013. The company’s property portfolio is comprised of 29 multifamily that were purchased for approximately $1 billion. The company continues to raise capital through its distribution reinvestment plan.
Resource Real Estate Inc. has sponsored a range of investment vehicles, including traded and non-traded REITs, limited partnerships, joint ventures with institutional partners and global securities. Resource America Inc., the parent company of Resource Real Estate and subsidiary of C-III Capital Partners, is an asset management company that specializes in real estate and credit investments. C-III Capital Partners is a real estate and credit investment management and commercial property services company.