Monday, July 21, 2014

Filling A Void

I noted at the end of a post last week that Griffn-American Healthcare REIT II's shareholders are being solicited by a mini-tender firm.  The firm is offering to buy shares at a strong price compared to the REIT's original offer price.  Griffn-American REIT II is not the only non-traded REIT where shareholders are being approached by the mini-tender firms.  Signature Office REIT, the formerly named Wells Core Office REIT, and Strategic Storage Trust are also being targeted by mini-tender firms.  Below is a table with the offer price, tender price, and discount for the three tender offers:

Non-Traded REIT
Orig. Offer Price
Tender Offer
Discount to Offer
G-A Healthcare II
$10.00 to $10.22
0.0% to 2.2%
Strategic Storage Tr
$10.00 to $10.79
27.5% to 38.8%
Signature Off. REIT
All three of the non-traded REITs have terminated or suspended their share repurchase plans as they seek liquidity events, which have spurred the mini-tender firms.  These companies are annoying, to say the least, to non-traded REITs.  The mini-tender firms are money managers - not altruists - looking to acquire shares at cheap prices, not necessarily pay market prices, but they are stepping in to provide a limited form of liquidity where none is available.  The cliche is buyer beware, but in this case, it is seller beware.   

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