HTA Listing

Healthcare Trust of America (HTA), a non-traded REIT that raised approximately $2.2 billion in its equity offering, plans to list its shares on the NYSE on June 6, 2012.   It plans to list its shares in four stages, called tranches, which are defined as Class A, Class B1, Class B2 and Class B3, rather than list all its shares at the same time.  The Class A tranche, representing 25% of HTA outstanding shares, will trade initially, making a quarter of HTA's shares liquid.  The remaining three tranches - Class B1, B2 and B3 - will convert to the liquid Class A tranche in three stages, at six-month intervals.  All HTA shares will be fully liquid within eighteen months.  

HTA, as part of its listing announcement, also announced a reduction in its distribution.  The new distribution is $.575 per share, or a 5.75% yield based on an initial $10 per share purchase.  The previous distribution was 7.25%.  

HTA raised approximately $2.2 billion in its offering, so the first tranche will represent approximately $550 million of liquid shares.  HTA is offering a $150 million tender offer, through which HTA will purchase shares at a range of $10.10 to $10.50 per share.  If the similar tender offer for American Realty Capital Trust shares is used as a reference, investors that tender their shares can expect to receive $10.10 per share, not a higher amount.  The $150 million tender is only being made available for the initial tranche, not subsequent tranche releases.  The tender offer represents approximately 27% of shares being made available for trading in the first tranche, so investors that tender their shares are not assured of having their shares accepted in the tender offer.  Investors that do not have their shares accepted in the tender, if any, will still have the ability to liquidate their Class A shares on the open marekt.

It is important to note that ultimately the market will determine HTA’s listing price, although the tender offer may temper downward pressure in the short-term.