Tuesday, May 06, 2014

Tender Offers

Inland American announced last week that it expanded its original $350 million modified Dutch tender offer and accepted tenders for $394 million shares of its stock at a price of $6.50 per share. The original Dutch tender offer was for between $6.50 and $6.10 per share.  This is the first Dutch tender offer that I have seen related to REITs that has been completed at the highest price.  All others have been at the lowest price in the tender range.  It's amazing how many investors (6.6% of outstanding shares) were willing to bail out of this REIT at a 35% discount.

American Realty Capital Healthcare Trust (HCT) completed its tender last Friday.  HCT skipped the Dutch tender and offered to purchase up to $150 million of shares - or approximately 7.5% of HCTR's outstanding shares - at $11.00 per share.  HCT's tender was five times oversubscribed, so the REIT will purchase the tendered shares on a pro rata basis.

The tender result I am waiting for is Franklin Square Investment Corp's (FSIC) $250 million Dutch tender offer at a price of $10.35 per share to $11.00 per share. 

The Inland American tender offer was not part of a listing liquidity event like HCT and FSIC, but was a mechanism for Inland American to provide some liquidity to investors.

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