New York-based American Realty Capital Healthcare Trust III, Inc. (HT III), a publicly registered, non-traded real estate investment trust controlled by real estate powerhouse AR Capital, has initiated “a strategic review process to identify, examine, and consider a range of strategic alternatives.”
The REIT said it engaged SunTrust Robinson Humphrey Inc., the investment banking arm of SunTrust Banks (NYSE: STI), as financial advisor, and Shapiro Sher Guinot and Sandler PA as special legal counsel in connection with the strategic review process.
The move comes within days after its larger affiliate Healthcare Trust Inc., formerly operating as American Realty Capital Healthcare Trust II Inc., also started seeking strategic alternatives, in the midst of a crowded field of REITs being put up for sale and exploring strategic options.
Other competing REITs currently being shopped include American Farmland Company (NYSE MKT: AFCO), AdCare Health Systems Inc. (NYSE MKT: ADK), KBS Legacy Partners Apartment REIT (non-traded), KBS Strategic Opportunity REIT (non-traded), Stratus Properties Inc. (NASDAQ: STRS), and InvenTrust Properties Corp. (non-traded, formerly Inland American), which last month announced the spin-off of its Highlands REIT Inc.
HT III focuses primarily on healthcare-related assets including medical office buildings (MOBs), senior housing, and other healthcare-related facilities. As of December 31, 2015, HT III owned a $129.8 million investment portfolio of 19 properties with 467.932 sq. ft., consisting of 17 MOBs with a 97.1% occupancy rate, and 2 senior housing properties of which one is operating, according to the company.
HT III is advised and directly or indirectly owned and controlled by AR Capital LLC, AR Global, American Realty Capital Healthcare III Advisors LLC, and AR Global Investments LLC (the successor business to AR Capital LLC, operating as AR Global).
AR Capital, formerly operating as American Realty Capital, was co-founded in 2006 by Nicholas S. Schorsch and William M. Kahane. AR Global Investments LLC operates as a subsidiary of AR Capital LLC, a full service investment management firm providing advisory services to retail and institutional investors.
AR Capital’s AR Global is one of the largest alternative asset managers in the world, with over $18 billion of real estate and loans under management. AR Global’s investment programs include net leased properties in the U.S. and Europe, and domestic strategies focused on healthcare real estate, hotels, retail shopping centers, and New York City office buildings, as well as both real estate loans and corporate credit.
On November 9, 2015, private equity giant Apollo Global Management, LLC (NYSE: APO) and AR Capital, LLC announced that they have mutually agreed to terminate a planned transaction pursuant to which Apollo would have purchased for $378 million a controlling interest in newly formed AR Global Investments LLC, owning a majority of AR Capital’s asset management business.
A week later, on November 16, 2015, AR Capital announced the suspension and acceptance of new subscriptions to certain of its current investment programs effective December 31, 2015, “as a result of regulatory and market uncertainty.”
“Until there is greater clarity, we have decided to sit this one out,” said Kahane at the time, adding, “we do not intend to register any new product offerings nor pursue any of our existing offerings after December 31, 2015. Naturally, as the government’s position becomes clearer, we may reconsider our present posture on these issues.”
AR Capital’s decision came within days after the state of Massachusetts charged Realty Capital Securities (RCS) with fraudulently securing proxy votes to support real estate deals sponsored by AR Capital, which is owned by Schorsch and Kahane.