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Two Tender Offers Expire Tomorrow – Liquidity Events thus far in 2014

All the promise of last year’s REIT success is coming into bloom this spring. Between REITs listing, merging, and outstanding tender offers, the expected liquidity events are taking place in rapid succession. This success has generated capital inflows into non-traded REITs of $4.1 billion for the first quarter, which tops last year’s record pace.

Mergers

Picking up where 2013 left off, multiple non-traded REITs completed mergers. Resource Real Estate Opportunity REIT merged with Paladin Realty Income Properties. In the transaction, Resource acquired 11 joint ventures from Paladin for a fee of $51.2 million.

Keeping things in the family, CPA®:16 – Global merged with its sponsor, W.P. Carey, at the end of January. CPA®:16 – Global stockholders received $11.25 per share in the form of W.P. Carey common stock, with W.P. Carey issuing nearly 30.7 million shares.

In February, Inland Diversified Real Estate Trust merged with Kite Realty. The transaction was valued at $2.1 billion with an equity value of about $1.2 billion. Each outstanding share of Inland was converted into the right to receive between 1.707 and 1.65 Kite common shares.

Listings

This past month has proven to be an exciting one for the industry, and it’s not over yet. In addition to the many mergers, several REITs and a BDC listed on a national exchange.

Bluerock Residential Growth REIT listed on the NYSE on March 28 at $14.5 and since then has traded in a range from $13.14 to $15.63. Investors purchased units for $10 per share during its initial public offering; however, the stock went through a reverse split of 2.264881-to-1 on March 26th

American Realty Capital listed two REITs almost a week apart.

ARC Healthcare listed on the NASDAQ on April 7 under the ticker symbol “HCT” and has traded as low as $10 and as high as $10.7. Today the stock has closed at $10.39 per share. 

About a week after ARC Healthcare listed, ARC New York Recovery REIT listed on the NYSE under the symbol “NYRT”. Since then, its range has been from $10.25 to $10.97. Today it closed at $10.58. 

FS Investment Corporation, the industry’s first non-traded BDC sponsored by Franklin Square, listed on the NYSE on April 16. Trading under the symbol “FSIC”, it closed today at $10.28 and since listing, has traded at a high of $10.30 and a low of $9.82.

Tender Offers

A number of tender offers have coincided with these liquidity events. The ARC REITs and FS Investment Corporation each have tender offers that will expire during the month of May.

Another tender offer from a subsidiary of American Realty Capital Properties seeks to purchase shares of Cole Credit Property Trust at $7.25 per share. The offer expires tomorrow, April 25.

Also expiring tomorrow is Inland American Real Estate Trust’s tender offer, which points to another potential liquidity event. The offer had been extended from April 11 to give share holders more time. Inland’s original announcement offered between $6.10 and $6.50 per share for up to $350 million in shares.

And it doesn’t stop there. Cole Corporate Income Trust announced at the end of March that it too is exploring options for a liquidity event with the guidance of Wells Fargo.

With so many noteworthy events this early in the year, the trajectory of the industry for the months ahead will likely provide much for discussion and many more events to be monitored.