Two CIM Non-Traded REITs Plan to Merge and Create $6 Billion REIT
CIM Real Estate Finance Trust Inc., a publicly registered non-traded real estate investment trust, has agreed to acquire CIM Income NAV Inc., an affiliated non-traded REIT, in a stock-for-stock, tax-free merger transaction.
CIM Real Estate Finance Trust Inc., a publicly registered non-traded real estate investment trust, has agreed to acquire CIM Income NAV Inc., an affiliated non-traded REIT, in a stock-for-stock, tax-free merger transaction. Both REITs are managed by affiliates of CIM Group.
If approved by CIM Income NAV stockholders, the transaction will create a commercial credit-focused REIT with approximately $6 billion in total enterprise value and $3.2 billion equity value. Closing is expected to take place in the fourth quarter of 2021.
“We believe combining [CIM Income NAV] and [CIM Real Estate Finance Trust] will benefit stockholders of both companies by creating a larger, more diversified and valuable company, positioning the company for a public market listing,” said Richard Ressler, principal and co-founder of CIM Group.
According to the REITs, the combined 590 property, 23.8-million-square-foot real estate portfolio will have “greater tenant, industry and asset type diversity, providing…greater flexibility to opportunistically pursue growth strategies and recycle non-core assets.”
The combined company is expected to realize approximately $2.8 million in annual savings as a result of general and administrative synergies from the proposed merger, with additional cash flow improvement of $2.5 million to CIM Income NAV stockholders through the elimination of ongoing stockholder servicing fees, the company said.
The merger transaction is also expected to better position the REIT for a public listing, which is expected to occur in 2022.
As of July 31, 2021, CIM Income NAV shares were valued between $16.33 and $17.07 each, depending on share class. CIM Real Estate Finance Trust’s most recent NAV per share was $7.20 as of March 31, 2021.
Based on the following consideration, CIM Income NAV stockholders would receive an approximate 10.6 percent premium for each share of common stock they own:
Class D shareholders will receive 2.574 shares of CIM Real Estate Finance Trust common stock, which is valued at approximately $18.53 per share.
Class T shareholders will receive 2.510 shares of CIM Real Estate Finance Trust common stock, which is valued at approximately $18.07 per share.
Class S shareholders will receive 2.508 shares of CIM Real Estate Finance Trust common stock, which is valued at approximately $18.06 per share.
Class I shareholders will receive 2.622 shares of CIM Real Estate Finance Trust common stock, which is valued at approximately $18.88 per share
Additionally, CIM Real Estate Finance Trust intends to increase its distribution rate, so that CIM Income NAV stockholders will receive annual distributions in an amount equal to or greater than current annualized distributions after the closing of the proposed merger.
In December 2020, CIM Real Estate Finance Trust completed its stock-for-stock merger transactions with two other affiliated non-traded REITs, Cole Office & Industrial REIT and Cole Credit Property Trust V.
CIM Real Estate Finance Trust primarily owns and operates a portfolio of core commercial real estate assets consisting of net leased properties and a portfolio of commercial mortgage loans. The REIT launched its offering in January 2012 and raised more than $3 billion prior to closing in April 2014.
As of June 30, 2021, CIM Real Estate Finance Trust owned 469 properties totaling $3.7 billion, a portfolio of 247 loans with a net book value of $1.3 billion, and investments in three real estate-related securities with a net book value of $42.1 million.
CIM Income NAV launched its offering in December 2011 and had raised approximately $888.5 million in investor equity as of August 16, 2021. As of July 31, 2021, CIM Income NAV owned a portfolio of 121 properties in 33 states purchased for $853.9 million.
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