With 15-02 Looming, Griffin Capital Essential Asset REIT II To Reallocate Shares in Public Offering
Griffin Capital Essential Asset REIT II Inc. has sent a letter to registered representatives noting that beginning after October 30, 2015, it will reallocate the shares registered in its public offering and, commencing on such date, will no longer offer shares of Class A common stock in the offering.
On October 1, 2015, Griffin Capital Essential Asset REIT II’s board of directors approved ceasing the offering of shares of Class A common stock in the offering and approved the corresponding allocation of shares in the offering such that the company will offer up to approximately $1.8 billion in shares of Class T common stock in the primary offering, effective November 2, 2015.
Class A common stock subscriptions must be received by Griffin’s transfer agent, DST Systems, in good order on or prior to October 30, 2015. All funds for non-qualified accounts must be received by November 6, 2015 to be processed and all funds for qualified accounts must be received by November 30, 2015 to be processed.
With FINRA Rule 15-02 due to take effect in April 2016, requiring that investor statements reflect the impact of selling commissions, many sponsors have begun introducing Class T shares. These shares offer a smaller upfront commission to registered representatives with annual commissions in subsequent years. Unlike Griffin, some sponsors are offering multiple share classes, with traditional Class A shares offering the full commission. Some sponsors are even proposing lower upfront commissions, with the advisor paying some of the commission. MVP REIT II, currently in registration, has gone so far as to eliminate all securities commissions. Instead, registered representatives will be paid directly by the sponsor, with REIT shareholders paying no securities load.
As of September 30, 2015, Griffin Capital Essential Asset REIT II had sold approximately $206 million in shares of Class A common stock in the Offering.
On June 16, 2015, Griffin Capital Essential Asset REIT II’s board of directors voted to amend and restate the distribution reinvestment plan to include references to shares of Class T common stock, in conjunction with the decision to commence offering shares of Class T common stock. The amended and restated DRP will be effective as of October 19, 2015.
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